IFAs are fearful that investors who had their fingers burnt in the stockmarkets last year might be difficult to lure back for this year's Isa season.
A year ago, the big story for Isa investment was tech- nology. Now the Isa season arrives with a different backdrop. Investors are wary and some are reluctant to return to the market at all.
Most investment houses are taking a positive stance and running marketing campaigns and launching new products.
Chase de Vere savings and investment manager Anna Bowes says the major change is that investors are looking towards core areas rather than concentrating on specialist areas. She says: “Investors are being more sensible this year, investing in general global funds as opposed to more specialised areas.
“People are still very keen to get their Isa sorted out and they are still a very popular investment but consumers are not taking quite such high risks.”
The move to bring Pep rules in line with Isas has highlighted the fact that many investors are overweight in UK and European stocks.
Many investment houses feel that the Isa season will have an international flavour as investors try to balance their portfolios.
International funds are an opportunity for investors to look further than the UK and Europe. Fidelity Investments marketing director (UK wholesale) Dave Cowdell says a lot of brokers are using international investments as a way of battling volatility by diversifying. He says: “There is a requirement for investors to diversify internationally, especially if the markets are volatile. When one market is going down there will be another going up so it can smooth investment returns.”
Cowdell says multi-fund Isas are proving popular on the Funds Network site and this is again down to investor uncertainty. With a multi-fund, IFAs can offer multiple funds from different fund managers but through one Isa. This again helps with the need for diversification as investors do not have to put all their eggs in one basket.
Henderson Global Investors head of retail Simon Ellis bucks the trend by predicting that technology will be in the top five sectors this year.
He admits that the sector will not repeat last year's sales volume but says: “Global technology funds will be a big area. We appreciate the sector has had a very difficult six months but we still believe in the opportunities. The fund will be broad in its investments rather than concentrating on one particular area such as telecoms.”
With investment houses all pitching different themes, there is no one area that is grabbing the attention of investors and this makes the season twice as hard for IFAs.
Hargreaves Lansdown head of research Mark Dampier says: “It is a good time for investments. When the news is bad it is the time to buy and when the news is good it is the time to sell but clients tend to do the opposite. Now should be a great time to buy and there are good opportunities but this is a time when people do not want to do anything, which is frustrating.”
Although this Isa season may not break the record books, there will still be a lot of activity. Investment houses are not only preparing themselves for an Isa rush but also for a flood of Tessa rollovers and Pep transfers which should keep the industry busy and could restoke an enthusiasm for investment.