With deposit rates expected to drop even further below current low levels, investors looking around for a home for their savings should note that unit-linked funds are continuing to prove attractive and have been performing strongly.

A review of Irish unit-linked funds by BCP Stockbrokers shows that some have achieved substantial gains for investors in 1997, while offering a varying degree of risk to suit investor needs.

According to BCP's analysis, Bank of Ireland Asset Management achieved the best performance for investors with its North American Equity Fund. It yielded returns of 47 per cent in 1997 on the back of the strong US market. In the managed growth sector, Eagle Star increased the value of its fund by 28.5 per cent.

While traditionally conservative investors have tended to shy away from stockmarket-based investments, preferring to hold their money in bank deposits or invest it directly in property, the upsurge in money going into these funds shows that more and more investors are now seeking this type of exposure.

BCP reports that most Irish fund managers have seen a significant increase in the flow of money into their managed funds, with Hibernian alone, recording a net inflow of £1.26 million in the first three months of 1998.

Investors in the US have always favoured mutual fund-type investments over bank deposits, a trend which Irish investors now seem to be adopting in increasing numbers.

Unit-linked funds give investors an opportunity to make gains in the various international markets without having to actively manage the portfolio themselves. In Ireland investors can choose broadly between regional equity funds, property and managed funds, which contain a mix of investment options, including equities, property, bonds and cash.

Equity-based funds have tended to deliver the best performance for investors, over one, three and five years. BCP suggests that despite the sustained bull-run on world equity markets, investments in Irish and internationally-quoted stocks should still have the potential to yield substantial dividends for investors. In the medium term, BCP believes that equities will continue to outperform all other investment assets, most notably in Europe.