A royal arrival

With the eagerly anticipated arrival of the royal baby, it’s understandable to look to the future and wonder what life might have in store for the young Prince. At this time of new beginnings, parents across the country might be thinking about how they can give their child a head start in life and one thing they may want to consider is saving for their child with investment companies.

Over the past 18 years, a one-off £100 investment in the average investment company (ex VCTs) would have more than trebled to £389, whilst an annual £100 investment over the last 18 years (£1,800 in total) would now be worth an impressive £4,200. For parents and relatives who preferred to make monthly investments, a £50 monthly investment over the past 18 years would have grown to an astonishing £32,967 (£10,800 invested in total) and a £100 monthly investment would now be worth a staggering £65,934 (£21,600 invested in total).

Interestingly, over the past 18 years the best performing investment company sectors have been Global Emerging Markets which has returned 575%, Country Specialists: Asia Pacific up 526%, UK Equity & Bond Income returning 456%, Sector Specialist: Biotechnology & Healthcare which is up 399% and Asia Pacific – Excluding Japan which has returned 394%.*

Annabel Brodie-Smith, Communications Director of the Association of Investment Companies, said: “Parents and relatives up and down the country will be thinking about how they can give their child the best financial start in life. Something they may like to consider is investing for their child in an investment company, perhaps through a Junior ISA or investment company children’s saving scheme.

“Investment companies give investors access to the significant growth potential of the stock market and with their closed-ended structure they are an ideal long-term investment vehicle.  Investing for a child, say, over 18 years gives investors a long time horizon enabling them to smooth out the ups and downs of markets and take advantage of investment companies’ strong long-term performance.”

Monthly investments over 18 years to 31 March 2018

Source: Morningstar

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Notes

1. All data to 31 March 2018 and excludes 3i with no expenses taken into account. Source: Morningstar.
2. *% share price total return to 31 March 2018.
3. The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment.  Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs. The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help members add value for shareholders over the longer term. The AIC has 349 members and the industry has total assets of approximately £174 billion.
4. Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance.  The value of investment company shares, and the income from them, can fall as well as rise.  You may not get back the full amount invested and, in some cases, nothing at all.
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