The Band-Wagon Gathers Speed
UNIT TRUSTS
By OLIVER STUTCHBURY
El OR some years the mutual fund industry in the United States has looked upon itself as the fastest-growing industry in that fast-growing economy. It now boasts a gigantic $36,000 million worth of assets, and an initial offering by Mr Tsai this spring collected a cool $270 million in hard cash. In Britain we cannot boast anything quite like this, but the unit trust industry here has scored some impressive gaps in the last year. Figures issued by the Associa- tion of Unit Trust Managers shows that the total funds of unit trusts grew from £446 million ta the end of June 1965 to £640 million at the end of June 1966. The equivalent figure for in- dividual unit-holdings is nearly 1.6 million in 1966 against 1.4 million in 1965. It may be that the unit trust industry has become the fastest- growing industry on this side of the Atlantic as well as on the other.
The year has seen a colourful crop of new- comers enter the unit trust field. It is sometimes assumed, all too easily, that this plethora of choice is confusing to the would-be investor and a bad thing for the financial community as a whole. I do not subscribe to this view. Moreover, the emergence of one of the Big Five banks (Lloyds) as a unit trust promoter holds out great promise that these latter institutions will at last wake up to their responsibilities to give their customers comprehensive financial advice. In this day and age it makes no sense at all for the bank branch manager to go through the traditional drill of introducing his customer who wants to invest in equities to a stockbroker, who sends advice which the bank branch manager passes on to the customer, who may or may not act upon it. The individual deals are too small to be profitable to the stockbroker. The work involved is unremunerative to the bank. Above all, the customer comes to own an in- vestment which is relatively expensive to buy, insufficiently diversified and undermanaged. Unit trusts are the answer to this problem.
The fact about this crop of newcomers and plethora of choice in the matter of unit trusts which is distressing is the utter lack of dis- crimination with which city editors in their wisdom hail the steady stream of block offers:
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