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Fund firms delay booking their season tickets

Fears have been growing since the terrorist attacks of September 11 that next year may not see an Isa season.

After Isa sales plummeted to £376m in September – a drop of more than 45 per cent on the same month last year – the industry is facing up to the fact that investor sentiment has been hit hard by market conditions, including the 19-month bear market.

Fund managers can usually be counted on to remain optimistic, no matter which direction the markets are heading. But, last week, M&G announced it is effectively writing off January and focusing its Isa marketing efforts on February and March.

Aberdeen also fears that sales are unlikely to pick up until March. Sales and marketing director Jonathan Polin says: “There does not seem to be a lot of advantage to coming out early into the market in January. I think you will find you have got a more narrow sales base this year. Instead of December until March, it will be the middle of March until the first few days of April. It will be a much more concentrated Isa season.”

Although most investment professionals would agree that January is likely to be a better time to get into the market than the start of 2001, their message is unlikely to be appreciated by many investors who bought Isas a year ago and are now sitting on losses of more than 30 per cent.

Investors who let themselves be convinced that the technology market had bottomed out a year ago will be the worst off. A £1,000 investment in Edinburgh&#39s technology fund a year ago, for example, would now be worth around £300.

Perhaps some comfort can be taken from the fact that some fund managers still believe there will be an Isa season, albeit a shorter one. M&G managing director of UK retail Phil Wagstaff is confident that, once the deadline approaches, people will realise that their Isa allowance is too valuable to waste.

“The closer we get to March, the more people will realise that if they do not use their allowance now, it is gone,” predicts Wagstaff.

While Fidelity marketing director David Cowdell agrees the Isa season will come late, he sees no need to wait until the last minute before launching an advertising drive. “I would not be surprised if a lot of investors leave it to the last minute to invest but a lot of decision making will be going on before that. I think you need to be getting out into the market early,” he says.

Although most IFAs try to distance themselves from the usual end-of-Isa-season rush by encouraging clients to invest when the time is right rather than at the last minute, most still do a large chunk of their Isa business in the first three months of the year.

Furthermore, in a tax year which has seen few signs of recovery, many investors may be sitting on cash and waiting for the right moment to put it back into the market. For those who have not used their Isa allowance by the end of the year, IFAs will no doubt be able to make a strong case for at least £7,000 of their cash to be put back into the market.

Plan Invest joint managing director Michael Owen is not ready to write off the beginning of 2002. He says: “I have never enjoyed the Isa stampede. I know people like deadlines but I have always thought Threadneedle had the right approach when it tried to convince people that Isas should be taken out all year around and not just left to the last minute.

“Unfortunately, the mass population is probably not quite ready to invest in Isas yet but I am surprised the managers are writing off January. In years gone by, January has been the best month of the year for sales. There are a lot of people who will be nervous but a fund manager like M&G, which has a good range of fixed-interest products, could be pushing its bond funds. We will definitely be trying to sell Isas in January.”

If several of the big fund management names do decide to take a back seat for the early days of next year, it is possible that newcomers may move into their place. New Star is certain to advertise heavily, while First State is starting a major campaign to boast of its rebranding. Some Isa big names such as Jupiter are also set to continue to advertise as they have done in the past. But the ultimate key to the success of the Isa season probably still rests in the lap of the markets.


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