The future of the EU has been called into question over recent weeks as Greece came close to leaving the Union. This week we look back to November 1993, when the European Economic Community formally became the European Union.
The cover story of Money Management in November 1993, celebrating its 30th anniversary that year, discussed which equity products investors should look at for guaranteed returns. The feature identifies two distinct breeds of guaranteed equity products that were on the market – those with options following to the FTSE growth or linked to a unit trust – which could be further broken down into the structural categories of deposit-based investments offered by building societies, bonds offered by insurance companies, and unit trusts with a guarantee alongside.
The issue also looks at single pricing in unit-linked insurance funds and the ongoing debate in the unit trust industry around pricing reform. The Securities and Investment Board, the regulatory body at the time (which eventually evolved into the FCA), had ruled in favour of the new open ended investment company (Oeic), the valuation for which was deemed to include single pricing.
The feature goes on to suggest, “The method of pricing an Oeic will be just one of a number of important design features. The price should be simple to understand without causing inequality amongst investors. Assuming a single price is adopted, Money Management would prefer to see a swinging single price struck either on the creation price or the cancellation price, plus the manager’s initial charge separately disclosed.”
In other news…
On 1 November 1990, the Maastricht Treaty further integrated Europe form the European Economic Community into the European Union, leading to the creation of the euro. The treaty set out an obligation that member nations to adhere to “sounds fiscal policies, with debt limited to 60 per cent of GDP and annual deficits no greater than 3 per cent of GDP”.
The treaty went into further detail about inflation rates, exchange rates, long-term interest rates, and government finances, including specifics around the allowable annual government deficit and government debt. The world would soon learn that these were more suggestions, less stringent rules…
The number one single at the time was Meat Loaf’s “I Would Do Anything for Love (But I Won’t Do That)”, and the top film was Disney’s Aladdin.