Corporate bond unit trusts are delivering almost three times as much income as deposit funds, accord...
Corporate bond unit trusts are delivering almost three times as much income as deposit funds, according to figures from Autif.
The average annual income on a corporate bond fund was £63, based on £1,000 invested, over one year to 1 July while the average annual interest on the same amount invested in building society deposits was £22.
The average UK equity income fund delivered income of £63 from £1,000 invested over one year to 1 July. In all cases Autif used fund figures on an offer to bid basis.
Although UK equity income funds are delivering similar amounts of income to corporate bond funds, their capital growth has been much better over the last 10 years on the back of their equity exposure.
The capital invested in an average corporate bond fund grew by 29% over the 10 years from June 1990, compared with 91% for the average UK equity income fund. In these cases Autif used offer to bid figures with net income reinvested.
Autif also found that average returns from UK equity income portfolios were broadly similar to those achieved by UK All Companies and Global Growth funds.
After 10 years, £1,000 invested in the average UK equity income fund grew to £2,781, compared with £2,938 for the average global growth portfolio and £3,035 for the average UK All Companies fund.
Autif also found that UK equity income fund investments have tended to outperform managed life fund holdings. A £1,000 investment in the average UK equity income fund delivered a return 15% higher than that achieved by the average managed life fund.
Regular savings investments in UK equities also far outstripped the returns available from deposit accounts. A regular savings of £50 a month in the average UK All Companies fund delivered £825 more in returns than the average deposit account over five years, a gap which widens to £4,950 over 10 years and £11,745 over 15 years. The association found that after 10 years, £1,000 invested in the average UK equity & bond fund beat the retail price index by 75%, or by 96% in a Pep or Isa, while deposit accounts were 8% ahead of inflation.
Investors in Europe and North America over the last 10 years have seen some of the best returns.
Those who invested £1,000 into the average Europe including UK, European smaller companies, North America or North America smaller companies fund would have seen returns in excess of £4,000 over the last decade.
Regular savings investors putting £50 a month into the average fund in any of these sectors or in the average Europe excluding the UK fund achieved returns of more than £15,000 over the last 10 years.
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