The Unit Trust
By P. N. WISE
THE market in British Government securities is at a very low ebb and is likely to continue to be so until such time as steps are taken to stop the vicious inflationary spiral. Looking back over the past twelve months every sensible investor will quickly realise that unless he has had his money in selected British equities or Canadian and US dollar stocks, he is today far worse off than this time last year, as regards the value of his invested capital. But the small investor who has wisely spread his risk through an investment trust unit has not suffered—on the contrary, he has kept pace with the inflationary bogey. What the investor needs is a good, steady, real income— that is, a money income which keeps pace with the rising cost of living.
The best illustration of this can be obtained from an excellent twenty-five-year review by the M&G Unit Trust Group. They quote three examples over this period, namely :
(I) The investor in a fixed interest security such as per cent. conversion stock, his money income has not changed, but because the cost of living increased by 163 per cent., the real value of his changed income is less than two- fifths of what it was.
(2) A first-class ordinary share was selected, which over the period had wide fluctuations and in fact for four years paid no dividend, but is now giving him a good return.
(3) An investor in an M&G unit trust has had a steady income throughout which has kept pace with inflation, so that in effect he has had a real income. It is of interest to give a comparison now of unit trust prices as at the time of our last article in July, 1956, and now : July
1956 1957
Allied Investors Trust (Brit. Ind. Flex. 1st) 26/101 32/101
Bank Insurance Group (Cons. Units).. 21/- 25/6 Municipal and General (Midland Ind.).. 5/0+ 5/8 Orthodox (Orthodox Unit) 10/01 10/7f
There is no doubt at all that the investor today is more concerned not only with the depreciation of his income, but also with the diminution of his capital which is happening through bank and building societies deposits. These great institutions are vital to the economic life of the country, but lending money to them during this inflationary period (as a long-term investment) has been disastrous.
Do you remember those pertinent posters a few years ago of the Squander Bug? The Govern- ment cajoling not to spend your money because we now realise that they wanted the spending of it. It brings to mind a recent case of the family budget investigator in the Midlands who found that the weekly family income (after PAYE) was £65, and asked, 'How much do you save?' The answer was, 'Oh, nothing at all, but we are finding it more difficult to spend it!' You may well say that such a family are ripe for a co-partnership scheme or a profit-sharing arrangement whereby they can acquire shares in their own Company. Something was said on this subject last year and we are still of the opinion that the unit trust is the real answer. Since Canadian dollar securities have be- come increasingly popular with investors, it is important to realise that an interest can be taken in this field through the Keystone Fund of Canada. Here is a young unit trust which, within three years, has increased the value of its portfolio by 28 per cent.; in fact during the past two years the number of shareholders has increased from 2,700 to 4,70() and net assets by 89 per cent. This is a striking performance entirely due to prudent investments by the managers who have kept pace with the fast-growing economy of Canada.
There are equal opportunities for wise invest- ment in this country, which is now on the thresh- old of a second great industrial revolution, politics permitting. Who better than unit trust managers can advise and channel your money into sound businesses over a period of years, spreading your risks and safeguarding your capital?
It is regrettable that, owing to the slender margin of profit (to the management) on which unit trusts operate, there is an insufficient surplus to allow them to advertise more extensively. There is every type of trust to suit all kinds of investor and lists of securities in which funds are invested are published by the managers in their annual reports. What more can an investor want? Just a better understanding of the true value of unit trusts, which can only come to him by wider publicity, which it is hoped will be better sup- ported by banks and stockbrokers to the benefit
of all concerned. Today's Other popular Unit Trusts are : Price
Allied Investors Trust (El. and Ind. Dvlpt. Units) 16/101 Bank Insurance Group (Investment Trust Units) 21/41 Municipal and General (Gen. Trust Fund Units) 34/11 Orthodox Group (Atomic, El. and Gen. Units) 10/01
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