Will your mortgage be covered?

As the stock market plunged over the past two years, so did the value of their endowments.

But since the spring, the market's risen strongly - so does that mean the situation for endowments is looking sunnier?

According to endowment guru Ned Cazalet, the answer unfortunately is no - and he believes the problem is going to get even worse in the years ahead.

Not sufficient

Ned, from Cazalet Consulting, believes the average shortfall on endowments is likely to be around �10,000.

And he also thinks that 80% of maturing endowments will not be sufficient to pay off loans.

Ned Cazalet: Almost all endowments will eventually fail

Worse still, he believes the recent recovery in the stock market will not feed through to endowments.

"Over the last three years the market has been going down so obviously, investment performance took a knock," he explains.

"Of course as the market fell, many institutions reduced the proportion of their investments in equities.

"In some cases - such as Equitable Life - the equity weighting is now miniscule.

Portfolio

"And so even though the market has recovered, that recovery will apply to a much smaller part of the average investment portfolio."

Ned says that even though there has been a sharp recovery since the spring, the actual gain since the end of last year - when performance bonuses are calculated - was only about 7%.

Also, many investment firms' solvency levels have taken a battering - so the funds are not available to "smooth" returns.

Ned adds that projections of 6% annual growth - still used by many investment companies - are just too high.

"This year a high proportion of endowments won't meet home loans," he predicts.

"Next year the figure is likely to be around 60% - and looking five or six years ahead, almost all will fail."