Investors Save £2.5bn in ISAs

In the 12 months to April 5, investors poured £2.3 billion into their ISA portfolios, more than £1 billion more than the previous tax year

Emma Wall 30 April, 2014 | 3:25PM
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Investors poured £2.3 billion into their ISA portfolios in the 2013/14 tax year, which ended at midnight on April 5. True to form, thousands of investors left their ISA allocation until the last minute – with £358 million of ISA cash being deposited in the final five days, higher than any other full month in the tax year.

The total invested last tax year was an impressive £1 billion more than the 2012/13 tax year – indicating that investor confidence is on the rise. Buoyant markets and significant inflows led total funds under management in ISA portfolios hit a record high in the last month of the tax year, to £784 billion.

Investors deposited £2.3 billion in open-end funds across ISA and non-ISA portfolios in March – with equities continuing their dominance as the most popular asset class. Nearly £1 billion was invested in equity funds last month, 10 times that which was deposited in March 2013. During 2012, the FTSE 100 index of blue chip UK companies was volatile – losing considerable value in June 2012. This led investors to be wary of equities when allocating that year’s ISA allowance. But last year’s considerable FTSE gains, coupled with the rise of other developed market equities and continued low interest rates, have driven UK investors into equity funds.

Daniel Godfrey, IMA Chief Executive, said: “Overall fund net retail sales in March were at £2.3 billion, exceeding February’s levels by more than £400 million. This demonstrates consistent retail appetite for investment funds. The sector rankings show strong sales across a wide range of asset classes, but equity funds with an income bias remained popular.”

Godfrey encouraged investors to remember ISA investment can be done year round – and that regular investments can have a smoothing effect on the market.

“Once again, there was a last minute rush into ISAs at the end of the tax year. Although this is very encouraging and it is well known that there is nothing like a deadline for a tax break to prompt action, investors need to be aware that you can invest into ISAs on a monthly basis and that doing so reduces the risk of getting your timing wrong,” he said.

HMRC figures for the 2012/13 tax year were released last week revealing 23,162,000 people in Britain have an ISA, which is nearly half the adult population. The average investment ISA has a value of £16,490 – made up of 16,010,000 cash ISAs, with an average value of £7,620 and 2,732,000 stocks and shares ISA, with an average value of £29,520.

 

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Emma Wall  is former Senior International Editor for Morningstar