Trustee stock
SAVINGS LOTHBURY
This week the'Trustee Savings Banks launch their long-awaited Unit Trust—or rather, seventy-six of them do ' the seventy-seventh, York' County, isn't playing. Sir Miles ThoMas, chairman of the National Savings Movement, looks on benevolently; and indeed the new trust is •not far removed from the National Savings Unit Trust so often canvassed. This link be- tween the worlds of the unit trust promoters and the savings banks 'may well bring a new kind of customer to the trusts' door.
If I say that the TSB Unit Trust is unexciting, no doubt its organisers—five directors from the banks, a strong committee of investment ad- visers, Schroder Wagg as investment managers —will take that as a compliment. They have played for safety, and they were right to do so: safety is the point on which their customers will need most reassurance. So this is a blue-chip fund, mostly home-based, largely in industrial stocks. Any temptation to put in the high- yielding commodity stocks—so popular with unit trust managers 'who want to pep up the rate of return—has been resisted. rsa Units, at the price of the initial offer, yield £3 16s per cent before tax. You could compare that, among equity earnings, with 34 per cent from West- minster Hambro Growth Investment Trust; or with just under 44 per cent on the Financial Times-Actuaries 500-share index, 5 per cent on to; or in fixed interest earnings, 6 per cent on bank deposit account—or Trustee Savings Bank special investment account—and 7-1 per cent on War Loan.
The lowest permitted holding in TSB Units is £50. Elsewhere—at Martins and Westminster Banks—the limit is as low as £20, but I think the trustee banks are right: if you can't put £50 on one side, you ought not really to buy units. There is an initial charge of 24 per cent, and thereafter a management charge of # per cent annually. With the trust also comes a unit- linked life assurance scheme and a children's trust scheme.
What is the potential for this trust? The trustee banks have some 1,400 branches between them, which is—for example—less than two- thirds of the number owned by the National Provincial. Bank and its subsidiaries. But there is a very large number of individual deposi- tors: something like ten million. Compare that with the figure for unit-holders: now just over one million. Two questions face, the trustee banks: how many of their depositors will move into units; and how far will this represent new saving? When the Post Office and trustee banks introduced the special investment accounts, no new money was brought in; but those with money in ordinary accounts—which pay only 24 per cent—switched freely into the new kind of account, leaving the banks paying out more money in order to stay where they were.
A more general point is raised by Sir Richard Barrett-Lennard, chairman of the East Anglian trustee savings bank. 'The bank' (be says in his report) 'will not take the initiative in advising anyone to invest in this unit trust. Each inves- tor.must decide for himself if he wishes to put capital into ordinary shares, but I can say of the new unit trust that the quality of advice and management which have been secured is such as to make it as likely a form of equity invest- ment' as 'any other.' A cool reception. But if banks own unit trusts, there is a conflict be- tween their duty to give impartial advice and the natural tendency to sell the home-made product. Sir Richard's answer may be right.
Previous page
