Look and learn

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Recently I had the privilege of travelling around the country to address investors and would-be clients on how best to put their savings to work. Before you embark on such an exercise you need to conduct a little research on what will interest your audience.

Preparing my background information, I looked at the growth of collective investments. It had occurred to me that OEICS might change the face of savings patterns in this country. The jury is still out, with leading houses taking opposing views, but there is a lesson to be learned from across the Atlantic.

Unit trusts are a widely marketed product and remain an efficient means of achieving access to the equity market. But their popularity is limited, with a relatively small percentage of the population holding them. True, personal equity plan (PEP) sales recently have helped considerably. Even so, compared with what has happened in America, unit trusts are still on the starting block.

Mutual funds are the unit trust equivalent in the US. In 1980 there were fewer than 1,000 of them, but the growth has been explosive, helped by the introduction of Independent Retirement Accounts - the American way of saving for your old age. Now there is some $4,500bn invested in their unit trust equivalent. The greater percentage is held in equity- related products.

The penetration of the mutual fund industry in the US may have lessons for us here. Around one-third of households have some exposure to the equity market through this type of investment. There is a greater awareness of the benefits of equities in the US. Moreover Joe Public has an independent mind. In the aftermath of the Wall Street plunge, a leading retail broker in the States reported a five-fold increase in telephone enquiries on the stock market. Most were simply to update prices.

It is worth reflecting on the developments in the States for two reasons. First, private investors there seem more prepared to take a long-term view of the market than the Wall Street professionals. Second, America is very good at exporting investment and business trends. We are still a long way behind the US in terms of personal pension provision even if our occupational schemes are the envy of the world.

If personal pensions are set to grow, the flow of money the US has experienced may develop here. I take this as a comforting sign in a market which remains difficult to read and could be directionless until the end of November when the Green Paper from the Treasury on taxation reform could show that New Labour is not new at all, but red socialism in both tooth and claw.

Brian Tora is chairman of the investment strategy committee of stockbrokers Greig Middleton and can be contacted on 0171-655 4000.

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