Record £6bn unit trust sales as PEPs take off 36point

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The Independent Online
A near-40 per cent surge in the sale of personal equity plans delivered another record year of unit trust sales in 1994, underlining the industry's claim of a fundamental shift in the profile of the British savings market.

Net retail sales of unit trusts jumped from £5bn to £6bn with sales of PEP unit trusts up from £3.3bn to £4.6bn, the Association of Unit Trusts and Investment Funds said yesterday. The increases came in a year when the FT-All Share index slumped 6.6 per cent and FT-SE 100 index of leading companies dropped over 10 per cent.

"Private unit trust investors were undeterred by the poor performance of the market," Philip Warland, the association's director-general, said.

"They are looking beyond the peaks and troughs of the stock market and focusing on the long-term rewards."

Separately, a report from Datamonitor, the management consultancy, predicted a 46 per cent increase in the sales of unit trusts over the next two years as consumers continue to move money out of building society deposits because of their comparatively low returns. However, figures compiled by the association show that the long-term trend away from building society deposits was reversed in the second half of 1994.

Market research commissioned by the association suggests younger people from social groups not traditionally linked with unit trust investment are becoming increasingly attracted. It showed that half of new investors were in the lower-income C1 category compared with 40 per cent of existing investors. The research also revealed that new investors are more interested in taking out savings plans than investing lumps sums The unit trust PEP is the dominant product in the market, accounting for an estimated60 per cent, the association said.

Inland Revenue figures show 1,230,000 unit trust PEPs were taken out in 1993/94, up from 640,000 the previous year and 120,000 in 1988, the tax year they were created. Since September 1991, funds under management have risen from £1.7bn to just under £12bn at the end of December 1994.

Unitholder accounts were up from 5 to 6 million in 1994, although the total funds under management declined from £96bn to £92bn.

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