View more on these topics

&#39Tis the season to be gloomy

Just as the Isa season looked like it could not get any worse, world stockmarkets plummeted again last week. With the FTSE 100 back to 1998 levels and the Nasdaq down by 60 per cent from its March 2000 peak, the chances of a last-minute recovery for Isa sales seem increasingly slim.

This has come just a fortnight after Autif predicted Isa sales could finish down by as much as 30 per cent this tax year.

Fund managers are in a difficult position. With 40 per cent of fund sales coming in the last two months of the tax year, they cannot afford to sit back for the last two weeks of the Isa season. But finding convincing arguments to tempt investors is increasingly difficult.

While some fund managers have decided to ride out the season without further action, others are squeezing the last drops from the market.

Zurich Scudder Investments, formerly Threadneedle, is diverting nervous Isa investors towards its less risky funds with a view to giving them a free switch when markets are looking more positive.

Communications director Richard Eats says: “In the long term, people will be better off in our Global Select or similar sorts of funds. But a lot of IFAs will have clients who are not in the mood to listen to the long-term argument at the moment.

“So we are recommending our cautious managed fund to those who are feeling nervous. Then they can switch for free later when they feel more confident.”

London-based IFA Best Invest is taking a slightly different approach. Deputy managing director Jason Hollands is trying to persuade investors to consider using a fund supermarket or provider which allows them to phase their money into their selected investments over the next six months.

Hollands says: “It is quite clear that a great many investors are ignoring their 2000/01 Isa allowances because of doom and gloom over stockmarket losses since last March.

“However, Isas are not one-year investments and history suggests that buying into weak markets with the indices at low levels is attractive. Our view is that investors should be bold and use their Isa allowances. That said, if it helps investors sleep at night, then phasing makes sense. It would be wrong to forgo a long-term tax allowance on the basis of short-term sentiment.”

Hargreaves Lansdown&#39s Isa is allowing clients to hold their entire £163.7,000 stocks and shares allowance in cash indefinitely. So investors can use their entire maxi Isa allowance for the tax year without exposing themselves to the market until they are ready. The cash earns gross interest of 5.5 per cent but this is taxable.

Head of research Mark Dampier concedes that such measures are necessary at the moment. Investors are understandably becoming increasingly nervous as media coverage of poor markets intensifies.

He says: “Clients do not look at the market screens every day but the problem is it has now started to appear on the News at Ten. The City never gets a mention until something goes wrong and this does affect people&#39s view.”

Dampier is not convinced the hype surrounding low Isa sales is completely justified, however. He says: “People are comparing this year with the last two years but they were both fairly extraordinary years. In 1998, you had the last Pep year and then you had what people thought was going to be the last year of the £163.7,000 Isa limit.”

Perhaps the most interesting of the other strategies is that of Jupiter which is selling its Isas via For now, it has only signed up until the end of the Isa season but it will consider a longer-term contract in April.

However, sceptics have questioned the merits of encouraging investors to buy their Isas impulsively at the last minute.

With only days to go until the end of the tax year, it is uncertain whether or not the investment industry will manage to stir up an 11th-hour Isa frenzy this year. Nevertheless, emergency collection points are being set up around the country, staff are being primed for a scramble and fund managers are lighting candles and getting out their prayer mats.


Flexibile annuity from the Pru

Prudential is aiming to give clients greater choice and flexibility with the introduction of its flexible lifetime annuity.This with-profits and unit-linked annuity has a choice of three investment strategies — cautious, standard or adventurous — plus a self-management option that allows investors to choose their own funds. There are 13 funds available including the Prudential […]

Product Matters

With the introduction of stakeholder pensions a profound change is taking place among the serious players in the personal pension market. Price is being driven down. To compete with the Catmarked stakeholder plan, personal pensions will have to exist inside the 1 per cent structure or demonstrate better value in some way. Or perhaps it […]

FSA date pushed back to November

The date the FSA will receive its full authority was pushed back once again last week as Treasury economic secretary Melanie Johnson announced N2 will not occur until at least the end of November. Johnson also confirmed that mortgage regulation will go live nine months after N2 in August 2002 at the earliest. The legislative […]

Xpert help makes online product purchase easier

E-commerce software provider Allfinanz is setting up a pan-European electronic marketplace for consumers to buy and sell financial products. Xpertmatch provides trading platforms called virtual distribution communities for consumers to buy life insurance and financial services on the internet from a range of providers. The transaction can be completed online, rather than just giving consumers […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm