Financial advisers »
Press office »
PR & news archive »
New Star research: just two in five investors t...
Cash ISAs set to dominate this year – but at what long-term cost?
The majority of active investors are either undecided or will not be investing in an Individual Savings Account (ISA) before 6 April 2008, according to research from New Star Investment Funds(1).
The research, carried out by NMG Research, surveyed 335 active investors across the UK. Of those surveyed, 62% said they would forfeit their ISA allowance this year whilst only 38% of investors said they were considering taking out an ISA before the tax year end.
Some 10% cited nervousness about markets and the general economy as the reason not to take out an ISA this year whilst 27% expressed other reasons and 25% remained undecided.
If those surveyed were to invest in an ISA this tax year, 44% would opt for a cash ISA, 11% would opt for a UK equity growth ISA and 8% would opt for a UK equity income ISA. Asia and emerging market funds – the strongest performing markets in recent years – would each account for just 4% of investors’ choices. Some 19% of investors said they did not know where they would invest if they were to take out an ISA this tax year.
Richard Wilson, marketing director, New Star, says:
"The opportunity cost to investors over the long term from both a tax and investment perspective could be significant. The survey suggests that the majority of investors may be relinquishing the opportunity to protect up to £7,000 from the clutches of the taxman.
"Whilst 44% of investors would consider a cash ISA this year they should consider the fact that over the past 20 years cash has returned 308.5%(2) compared to superior returns of 607.6%(3), 581.1%(4) and 417.8%(5) from direct UK commercial property, UK equities and bonds respectively.
"Long-term investors need to ask themselves this – if they look back in twenty years time, will they regret a missed opportunity and past short-term pessimism?
"Above all else, this research highlights the need for investors to seek independent financial advice."
1 Source: NMG research undertaken in February 2008.
2 Source: Cash returns as measured by an account paying interest equal to that of the Bank of England base rate 31.01.88 to 31.01.08.
3 Source: Investment Property Databank (IPD) Total Return Index, 31.01.88 to 31.01.08.
4 Source: Datastream, FTSE All-Share Total Return Index, 31.01.88 to 31.01.08.
5 Source: Datastream, FTSE gilts 5-15 years. Total Return Index, 31.01.88 to 31.01.08.
Any research in this document has been procured and may have been acted on by New Star Investment Funds Limited for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. No assurances are made as to their accuracy.
