Equities Remain Dominant as ISA Investors Shift from Cash

24 February 2014

  • 61% of respondents to Barclays Stockbrokers poll1 are  diversifying away from cash in favour of other investments 
  • 20% have transferred an existing cash ISA into a stocks and shares ISA 

As the UK’s low interest rate environment persists, Barclays Stockbrokers reveals that its clients’ appetite for diversifying away from cash to other investments continues, with equities holding the greatest appeal.

The poll¹ asked investors how the ongoing low interest rate environment has influenced their investment decisions. With recent media reports suggesting UK interest rates are unlikely to rise until at least 2015, the survey results reveal nearly 61% of respondents are reacting to the current economic situation by moving away from cash into other investments. This figure comprises 46% of investors who cite a move from cash into equities and 15% who are moving from cash into other investments, for example funds, gilts and bonds.  Additionally, 16% of investors polled are taking the opportunity to review their investment portfolio.  

The survey also highlights that 68% of respondents said they intend to invest their full ISA allowance this year (6th April 2013 to 5th April 2014); with 85% planning to invest in a stocks and shares ISA in the next tax year.  20% of investors have transferred existing Cash ISAs into stocks and shares in search of better returns. 

When asked the reasons for investing in a ‘self-select’ stocks and shares ISA, 86% cite the ability to make their own investment decisions and build a portfolio that suits them as the main driver behind their decision, 27% believe it allows them to react to market movements and an additional 40% expect to receive better returns over the medium to long term.

Catherine Penney, Vice President, Barclays Stockbrokers, said: “In the continuing low interest rate environment it remains difficult to secure the returns from cash that ISA holders are seeking. While of course investors should retain a balanced portfolio that meets their risk profile, our clients are seeking the potential for higher returns from the range of investment opportunities available through Investment ISA. The more buoyant equity markets over the last 12 months have probably encouraged those moving from cash to equities, as well as market events such as the Royal Mail IPO.

“Importantly investors who are prepared to take the risk to their capital should capitalise on their ISA limits, with £11,520 available to invest, before the end of this tax year.”

¹ Barclays Stockbrokers online survey of 1,013 ISA clients - a full breakdown of results available on request.  Fieldwork was carried out between the 30th January and the 11th February 2014. 

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