In the last ten years there has been a 53% rise in investment in ISAs, the tax-free wrapper into which you can both place cash, and invest in funds or shares. Over one third of all UK households (19 million people) now have an ISA, with roughly two thirds of them investing in a Cash ISA and one third in a Stocks & Shares ISA. More than £300 billion is invested in total.
So, what sort of ISA should investors be looking at for 2010?
In the last couple of years, the fall in interest rates has hit Cash ISAs badly. Cash ISAs bought in 2007, with an interest rate of 6.8%, could now have a yield as low as 0.56%.
Allenbridge, the Mayfair discount broker, thinks that investing in a Cash ISA now, while having no downside, might not give you quite the return you are looking for.
Jonathan Wallis, Director of Research at Allenbridge says: “Investing in a stocks & shares ISA certainly carries more risk than putting your money in a cash ISA. However, if you are prepared to take a longer view, and trade some increased risk for the possibility of higher reward, the attractions of investing in fixed income/bond funds, or high yielding equity funds are clear, in our opinion.”
“To give one example: if you held £10,000 in one of the best Cash ISAs three years ago you would now have £11,230.73. If you had invested in one of the top performing funds offering fixed interest you would have £13,569 after the three years. That is an 19% improvement over the same period.*”
“With a Stocks & Shares ISA, your fund will be monitored regularly so that you can see how your investment is performing. For those investors who are very risk-averse, Cash ISAs present a sensible way of sheltering capital from the taxman, but we believe that the risk can be outweighed by the reward. If your Cash ISA returns have been disappointing, then you could consider directing some of your new investment to a Stocks & Shares ISA. The key, as ever, is to pick the right funds, and that’s where Allenbridge’s experience, skills and track record can help.”
Below are some funds in different areas of the market which Allenbridge have recommended to clients in recent years and on which they take a positive view for the next three years.
Fund | 3 Year Return (%) | Return on £10K Investment |
Fixed Income | ||
M&G Strategic Bond | 35.69 | 13,569.00 |
Fidelity Strategic Bond | 27.82 | 12,782.00 |
M&G Dynamic Bond | 48.32 | 14,832.00 |
M&G Global Macro Bond | 48.53 | 14,853.00 |
UK Equity Income | ||
BlackRock UK Income | 5.51 | 10,551.00 |
Schroder income Maximiser | 7.30 | 10,730.00 |
Threadneedle UK Equity Income | -0.81 | 9,998.92 |
Absolute Return | ||
Threadneedle Absolute Return fund | 23.88 | 12,388.00 |
BlackRock Absolute Alpha | 20.02 | 12,002.00 |
* As at 19
March 2010 (Trustnet).
Past performance is not necessarily a reliable guide to future performance.
Contact Details:
Kate Davidson, Public Relations and Media Manager at Allenbridge Group PLC.
Mob: +44 (0)78 1462 4161
Tel: +44 (0)20 7409 1111
Kate.davidson@allenbridge.co.uk
http://www.allenbridge.co.uk/
Anthony Yadgaroff, Managing Director at Allenbridge Group PLC.
Tel: +44 (0)20 7409 1111
Anthony.yadgaroff@allenbridge.co.uk
Notes to Editors:
Allenbridge Group PLC is a rare beast in the investment jungle, a Mayfair-based discount broker that also advises large FTSE corporate pension funds and global banks. Founded in 1985, it carries out specialist research and consultancy, analysing investment manager performance across a wide range of funds: Unit Trusts, Investment Trusts, Venture Capital Trusts, Enterprise Investment Schemes, Charities, Hedge Funds, Funds of Hedge Funds and institutional Pension Funds.
In addition to providing comprehensive advice and strategic investment consultancy to leading institutions, Allenbridge also offers monitoring services, valuations and its specialised AllenbridgeCare service to individual investors on investment products and tax-shelter vehicles.
Allenbridge’s private investor division serves over 14,000 clients; retail and institutional funds under advisement exceed £25 billion.