Only a third of eligible parents have already invested in a Child Trust Fund (CTF) according to official Treasury figures. However, 67 per cent of these invested more that only the CTF vouchers provided by government.
F&C Asset Management now reported that two-thirds of parents who have taken up the government's CTF, decided to invest additional funds in order to save for their children's futures.
According to Jason Hollands, director of communications at F&C, this is good news. He said that it is necessary for parents to make the best financial choices with a CTF in order for it to contribute significantly towards major future expenses like higher education, a deposit on a house or a wedding.
He emphasised the importance for parents to not only contribute additional funds to the investment fund , but also that they choose schemes that have some equity exposure.
Mr Hollands said that historically, shares have outperformed cash over the long term and that F&C believes this would remain the case.
Official figures from the Treasury however suggest that around 1.25 million vouchers have still not been invested. Most parents who have already taken up the saving incentive have opted for opening cash accounts.
Mr Hollands commented: "It appears there is wide gap emerging between a relatively small number of parents who are financially savvy and the majority who are still confused about CTFs and investing in stock markets ."
A quarter of CTF investors have opted for the stakeholder option, with three quarters of parents opting for the six investment trusts offered in the plan.
Foreign &Colonial Investment Trust is currently the most popular choice within the F&C CTF.
"Foreign &Colonial's global remit makes it an ideal 'one-stop shop' for the small investor wanting a diversified exposure across global markets for a long-period of time," Mr Hollands said.
Experts warn parents to make best choices with CTF
Investments Quote Line
0845 108 0505
Experts warn parents to make best choices with CTF
Tue, 14 Jun 2005
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