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Life cover is highestyielding FTSE sector

Life insurance was the highestyielding sector in the FTSE AllShare index last year despite not having made the top three since 1994, according to HSBC Asset Management.

This is despite a turbulent year for life offices which has seen their solvency threatened by volatile markets.

HSBC&#39s list of sector yields from 1985 reveals that life insurance supplanted autos as the highest-yielding sector in 2002, with forestry/paper and household/textiles in second and third place respectively.

It is eight years since life insurance made its last appearance, coming third behind insurance in second and tobacco in first.

Tobacco, a staple weighting in funds such as the Neil Woodford-managed Invesco Perpetual income fund, features highly on the list, coming third in 2000 and second in 1999. It was the highest-yielding sector in 1997 and 1994 but it failed to make the top three in 2001, with autos, household/textiles and for-estry/paper taking those respective positions.

One sector that has virtually disappeared from the list is utilities which, after coming first in three of four years between 1986 and 1989, has not featured since 1995. Household/textiles has been more consistent, having finished in the top three since 1997, with first places in 1999 and 2000.

Hargreaves Lansdown inv-estment manager Ben Yearsley says: “It really demonstrates how there can be good and bad times to buy sectors.

“IFAs should perhaps use this kind of information when looking at what funds are investing in.”


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