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A fistful of pounds

Neil Woodford’s income funds were once again the lynchpins of what has turned out to be a very up and down Isa season.

Despite the market blip and interest rate rises it appears that consumers have not been as deterred from Isa sales as advisers had originally thought.

If anything the major trend for 2007 was the rapid growth in online sales, while the emergence of Sipps has also offered an alternative to the traditional tax haven.

Woodford’s two funds – Invesco Perpetual income and higher income – topped the best sellers list for both Skandia and Cofunds, which is no surprise considering the performance of the two funds.

Indeed, Woodford now has well over £12bn in assets within the two funds, having already added some £1bn in the first quarter of 2007.

Income was once again the dominant force in Isa sales, with Cofunds having six and Skandia four within the top 10 best sellers list.

This is reflected by the Fidelity FundsNetwork results, which show UK equity income garnering over 20 per cent of Isa sales. Other big winners in the income arena included Jupiter income, managed by Anthony Nutt, and Bill Mott’s new PSigma income fund, which has attracted some £108m in it’s limited offer period.

But is the Isa season getting boring? Property again performed strongly, hence the strong returns in the specialist sector, while the cautious managed funds also done well.

Hargreaves Lansdown senior adviser Ben Yearsley says: “The argument does hold water, but last year Skandia UK and global best ideas appeared in the top sellers, as did Neptune Russia. There aren’t that many, but if guys like Woodford keep churning the numbers, there is no reason for investors to switch. It’s a challenge that firms should rise to”.

BestInvest senior investment adviser Hugo Shaw says: “It has been the case of the usual suspects. UK equity income has always performed well as there is always a massive demand, while property continues to sell across the board.”

As for the impact of Sipps, a number of industry spectators have already been quick to cite their benefits, but whether they will cut off Isa sales at the knees remains to be seen- particularly as Isas continue to offer such strong tax havens and better flexibilities.

Yearsley says: “It should have no affect on sales as Sipps and Isas go hand in hand, although both are tax year driven.”

Whether or not they have been affected by ulterior factors, if the last minute dash into Isas is anything to go by then there is plenty of life in the old dog yet.

Guys like Woodford, Mott, Nutt and Brough are going to sell well during Isa season because they’ve given outstanding long-term results. For other managers to get in on the party it’s a case of taking the time not to beat them, but join them.

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