Worst Isa season on record say IMA
According to the Investment Management Association (IMA), the fund management trade body, this year’s Isa (Individual Savings Accounts) season has been the worst on record.
As investors were threatened by the financial crisis, sales of Isas fells to a new low said the IMA.
Net sales of Isas fell to £1.3 billion during the 2007/08 tax year, compared to £2.5 billion the previous tax year.
Overall, net retail fund sales lifted to £414 million in March, from £316 million in February, but sales were still down on the £1.2 billion comapred to March 2007.
Richard Saunders, chief executive of the IMA, said the Isa season this year was modest, though over £250 million inflows in the last five days of the tax year pushed it up to respectable levels.
In current uncertain market conditions, it is encouraging to see two months of positive net retail and Isa sales, a significant improvement on the previous three months. Private investors continue to be cautious, however, with bond funds proving popular, added Mr Saunders.
Isas were launched in 1999 as a replacement for the popular personal equity plans (peps). The Government had hoped that Isas would encourage an equity culture. However, they have been falling in just about every year since they were introduced.
Peter Chadborn, of CBK, an independent financial adviser, said this is typical human nature. When everything is going up, investors want a piece of the action. However, when markets get more tricky people just stay away, but they will have missed some opportunities as a result.
According to Ben Yearsley of financial adviser Hargreaves Lansdown, if you look at what has been happening over the last 6 months, the credit crunch, rising taxes and falling house prices, it is not a big surprise that people have avoided investing.