As the fund industry begins its biggest promotional push of the year, this week's setting of a new record for the FTSE-100 came as a timely gift.

 

Brokers were quick to dampen the idea that the blue-chip index's breakthrough above the 6950 level means now is a good time to sell.

Hargreaves Lansdown said the market was half as expensive as it was in December 1999 when the previous peak was reached at the height of the dotcom bubble. The overvaluing of technology shares back then meant the average share price of the top 100 companies last time around was at 30 times their annual earnings per share - a price-earnings ratio or PER of 30.

Today the market is on a PER of 16, slightly above the long-term average of 15. "In other words the glass is either half empty, or half full, depending on your point of view," said Laith Khalaf at Hargreaves.

The failure to break through the 1999 peak has been "a major psychological barrier for investors over the past 15 years", according to Adrian Lowcock at Axa Wealth. "In the past two years alone the FTSE 100 had come close to reaching a new record high on 20 separate days - where it had come within 100 points. This is a watershed moment and investors can finally put the dotcom bubble that caused the last high behind them."

But Annabel Brodie-Smith at the Association of Investment Companies says: " It would be easy to think that investors don't have a care in the world, but of course there's always cause for caution."

The AIC's latest confidence survey with research group Morningstar found 25 per cent of investors are mostly concerned about the Eurozone crisis - up from 15 per cent a year ago. For 16 per cent the big worry is a market correction, while 12 per cent cited the heightened uncertainty around a general election.

However 49per cent of investors plan to increase their stock market exposure over the next few months, with 25 per cent saying savings rates are too low, 20 per cent feeling optimistic generally, and 14 per cent saying the oil price fall has increased their disposable income.

The key to returns is dividend growth. Even someone who invested in a FTSE-100 tracker fund at the peak would still have made a 46per cent return after charges with dividends reinvested. The FTSE All Share is the UK index which most tracker funds follow, and after paying charges someone with a UK all-share tracker fund would have made a 75per cent return.

That beats retail price inflation of 53per cent and consumer price inflation of 37per cent, while a UK Gilts fund with interest reinvested would be showing a 95per cent return - though equities do tend to be ahead of gilts over most long time-frames.

Fidelity Personal Investing reminded investors that "time in the market matters more than timing the market".

Someone who invested £1,000 in the FTSE All Share 20 years ago but missed the best 10 days in the market since then would have achieved an annualised return of 4.83per cent, compared with an annualised return of 8.09per cent if they had stayed in the market the whole time. Missing the 20 best days would have depressed the return to 2.67per cent.

Tom Stevenson, investment director at Fidelity Personal Investing, said: "This shows the risks of trying to time the market and how expensive it is when you don't get it right. It's difficult to predict the best time to be in and out of the market, especially as the best and worst days very often tend to bunch together during periods of heightened volatility. There is a real danger that you increase your underperformance by capturing the worst days in your personal performance while missing out on the best."