Just a few days before the first Child Trust Fund vouchers can be invested, confusion about charges, eligibility, and investment options is still widespread. Providers have seen the majority of parents opt for cash accounts instead of stocks and shares versions, and have suffered from inaccurate reports saying stakeholder child trust funds did not amount to a good deal for the child.
It is believed that many parents are choosing the safe option of a cash account because they are unaware of the likely returns to be gained from equity markets in the 18 years that the money will be invested. Research from the Association of Investment Trust Companies has shown that 1 in 5 parents are undecided about where to invest the vouchers, with only 8% choosing share-based investments. Forty eight per cent say that they do not understand share-based investments well enough to make an informed decision.
Our view
Confusion is not surprise given that there has been little guidance issued for parents.
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