Anyone who had invested just ahead of the UK's last stock market crash 13 years ago would still be b...
Anyone who had invested just ahead of the UK's last stock market crash 13 years ago would still be better off than if they had left their money in the building society.
As the anniversary of Black Monday approaches the AITC has produced research suggesting full market exposure has produced higher returns even when there has been volatility in the index.
The trade body said that a lump sum investment of £1,000 made into the average performing investment trust just before the 1987 crash would today be worth £4,079. The report describes various investment scenarios involving lump sum and regular savings, which demonstrate the superior returns to be had from equity investing.
The major difference in returns between the scenarios being that the success of lump sum investment depends largely on the timing of the investment.
The report focuses primarily on the benefits of regular investment trust savings, pointing out that £50 per month invested in an investment trust since just before the 1987 crash would by 2000 have accumulated the sum of £22,250, based on a total investment of £7,850.
In another scenario described by the report, a regular investment of £50 started just after the crash would result in a sum of £21,480 accumulated over the same timescale as before, based on a total investment of £7,650.
A lump sum investment of £1,000 immediately after the crash of 1987 would, the report points out as an example of the best possible scenario, by today have built up a sum of £6,030 as of the end of August 2000.
The overall conclusion to be drawn, according to the report, is that while volatility will always cause concern, regular saving will smooth out the ups and downs inherent in this kind of investment.
Annabel Brodie-Smith, public relations manager at the AITC, said: "This research should act as a wake up call for anyone considering investing in an investment trust. Whilst concerns over stock market volatility are only natural, these results illustrate that both lump sum and regular savings into investment trusts have produced spectacular performance."
For more information call the AITC direct on 0207 282 5577
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