Unit trust ownership broadens

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The Independent Online
Working-class people are piling into unit trusts and personal equity plans (PEPs) in a bid to beat building society rates and deny the taxman a slice of their cash, according to research published yesterday by Autif, the fund management trade body.

The proportion of so-called C1, C2 and DE investors, typically ranging from skilled manual to unskilled workers, increased from 54 to 68 per cent of all investors. By contrast, the proportion of investors in the A and B - professional to managerial - categories dropped from 46 per cent to 33 per cent.

Autif's survey came as it announced yesterday that net retail sales of unit trusts reached pounds 6.5bn last year, more than double the total in 1995. Net PEP sales reached pounds 5.7bn, 85 per cent up on the previous year.

Philip Warland, director general at Autif, said money had been flowing into unit trusts in "startling quantities".

"Many investors entered into the market for the first time, looking for better value than deposit interest rates and 1997 will see more growth as the share-owning population swells."

Mr Warland said the amount being saved in PEPs would soon outstrip that in Tessas, a safer form of tax-free investment offered traditionally by banks and building societies.

"That is as it should be. Once people have sufficient liquid savings they should move to the higher return of a PEP."

An Autif spokeswoman said: "This should not be taken to mean that the number of middle-class people investing in unit trusts is falling. It continues to rise, but what is happening is they are being overtaken by the numerically superior numbers in the other categories."

The survey, the third to be produced, is based on a random sample of 600 people who contacted Autif's information service for details about investment.

The main priority, given by 68 per cent of investors, was to beat building society rates, while 55 per cent listed tax saving opportunities and 43 per cent wanted to boost their income. In all, 83 per cent of those questioned said a unit trust had a chance of making more money than a bank or building society account.

Further evidence of the social shift came from the average monthly savings payment, which dropped 11 per cent to pounds 105 compared with 1995.

However, investment strategies varied. Social groups AB invested 8 per cent of their funds in Europe, compared with 5 per cent of CDEs.

By contrast, 14 per cent of CDE funds went into UK income trusts, compared with 10 per cent of ABs.

The Autif spokeswoman said: "There are also indications that there is increasing understanding of unit trusts. People gave the spreading of risk and the value of professional fund management as reasons for investing."