View more on these topics

New spring in the Isa’s step

The FTSE All Share looks set to deliver a third successive year of positive returns and many fund managers are looking forward to what they expect to be a buoyant Isa season.

The news that Treasury Economic Secretary Ed Balls has confirmed the tax wrapper is here to stay has brought Isas back to centre stage.

Investec managing director David Aird believes this year may see Isa inflows soar to match the first two years of the tax wrapper back in 1999 and 2000, noting that investment companies have already booked up nearly all the advertising space in the first quarter of 2007.

Fidelity head of IFA channel Peter Hicks says the group is planning for the new season earlier than ever this year and is already advertising heavily across the trade and national press.

Both Aird and Hicks expect sales to be spread more evenly across the sectors than in the first two years of the life of the Isa, which saw sales dominated by technology funds.

Hicks says: “Back in 1999, Isas were launched in the middle of the technology boom so many investors would have gone for these types of fund.”

Following the bursting of the technology bubble, which heralded the start of a three-year bear market, investors have remained far more cautious, as seen by the post-technology boom spike in corporate bond fund sales and subsequent interest in equity income and more recently property.

Artemis product and sales director Nick Wells hopes the news that sales in the cautious managed sector pipped property sales on a net basis in the third quarter is evidence that investors are not focusing solely on property as an asset class.

He says: “The message has got through to most investors that equities are not expensive. Investors are looking to put more money back into the market and they look good value. The only potential issue is the housing bubble and the continuing popularity of property funds.”

Investors use their Isa allowance in different ways, however, and this pattern has not really changed since Isas were launched, says Aird. He says these different types of investor will typically be targeted quite differently.

Aird says: “Isa investors are quite polarised. Some investors use them for speculative investments outside their normal portfolios to go for the chance of higher returns. Others use them purely as a tax-efficient investment tool. Our strategy has not changed. We want to attract the latter type.”

Fidelity is targeting both types, marketing its China and India focus funds at more adventurous investors looking for racier satellite holdings while tilting its multi-manager and moneybuilder portfolios at investors looking for lower-volatility core holdings.

Hicks believes the increasing domination of platforms in Isa distribution is also helping investors to cast their nets wider when picking their funds.

This also applies to the diversity of fund management groups being used by investors.

Barings sales and marketing director Ian Pascal says his firm has not traditionally been a big player in the Isa market but this has improved with the advent of fund supermarkets.

He says: “We get more business throughout the Isa season now than historically. The new tools on the platforms will automatically bring out whatever the best funds are and, for us, I would be amazed if we do not see a big pick-up in sales in our European fund this season.”

Hicks also believes that there will always be a last-minute rush for Isas as the end of the tax year draws in but the purchase of Isas is now spread more throughout the year than before fund supermarkets emerged.

He says: “We have seen a slight smoothing out of Isa inflows as business has come in throughout the year but will still see a sales spike in the last two weeks before the end of the tax year.”

Pascal says the increasing use of electronic marketing to get the message out to Isa investors is another factor helping spread investments out over the year.

“We are using more fund manager video links which make fund manager info more accessible to investors than previously,” he says.

Aird says his firm is trying to increase its communication with investors to educate them about the advantages of investing at the start of the tax year to get the full advantage of the tax breaks available rather than just rushing in at the end.

He says: “For the last six years, we have consistently told the marketplace that the Isa season lasts 12 months, not just the last few weeks of the tax year and our approach will be the same this year.”


Ticket to ride

Congratulations to Selestia head of corporate communications Pippa Russell and Billy Ferara. Or rather, the very recently wed Mr & Mrs Billy and Pippa Ferara.In a stunning ceremony, the bride and groom stopped traffic – literally – outside the Institute of Civil Engineers as they ferried their guests to the venue in a team of […]

Paragon says MEX and C&G losing buy-to-let focus

Paragon Mortgages managing director John Heron claims that Mortgage Express and Cheltenham & Gloucester are failing to live up to their potential in the buy-to-let market.Speaking at the Mortgage Intelligence 10th anniversary conference in Wales last week, Heron said he believes MEX has lost its way in recent years while C&G lacks focus.He said: “C&G […]

Remortgaging at five-year low as retention strategies hit home

The Council of Mortgage Lenders claims that lenders’ retention strategies are already having a dramatic impact on the remortgage market.It says levels of remortgaging is at a five-year low as figures for September show it accounted for 30 per cent of the market by value – the lowest figure since August 2001 and down from […]

Shining Euro

This is the time of year that fund managers firm up their forecasts for the new year. The results typically shape portfolio performance for the final quarter. For the last few years, the process has been equity market-friendly, with investors concluding that the year will see continued growth, and positioning accordingly. This year, the decision is more complicated than usual, for there are cross currents in the economy and a mixed pattern of performance within the stockmarket.


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