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Worst quarter in 10 years for unit trusts and Oeics

UK unit trusts and Oeics recorded their worst quarter in more than a decade over the three months to September 30.

The figures, part of Lipper&#39s quarterly fund industry review, reveal the average open-ended fund fell by 15.38 per cent – the biggest decline since unit trusts fell by 18.99 per cent after the Iraqi invasion of Kuwait in the third quarter of 1990.

The technology and telecoms sector produced the worst figures, falling by 38.01 per cent over the quarter, with one fund – the Edinburgh technology fund – falling by more than 50 per cent.

Only four Autif sectors produced positive returns for the quarter – index bear, UK gilt, UK corporate bond and money market while 22 of the 32 Autif sectors registered falls of greater than 10 per cent. Every conventional equity fund registered negative returns.

Lipper global marketing director Steve Lipper says: “Near-term pessimism and uncertainty has rarely been higher. And yet, history shows successful long-term investors are those that move against the prevailing wisdom. In general, investors tend to see more risk in a market that has dropped by 25 per cent than one that has risen by the same amount.

“During some periods, Q4 1999, for example, there seemed to be little uncertainty. At those times, risks are greater than they appear, as investors confuse rising prices with reducing risk levels. A market drop, such as now, may be the time to look for good long-term investments.”

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