The FTSE 100 investment platform has noticed a marked difference in the number of cash ISA investors who have transferred money out of their savings deposits and into active funds, trackers and individual shares this year.
Year-on-year, there has been an 87% uptick in the number of investors who have moved cash from their ISAs to other stocks and shares available on the HL platform.
On the active fund side, the CF Woodford Equity Income and Income Focus funds, the Lindsell Train Global Equity fund and Fundsmith Equity fund have been top destinations for investors who feel like their cash is burning a hole in their pocket.
The £1.03bn Jupiter India fund, one of the top performers of the first quarter, has also been a popular choice among impatient ISA investors.
HL chartered financial planner Danny Cox attributed the increase in risk appetite to investors’ frustrations with the Bank of England’s inaction as “the spending power of their cash is going backwards at a rapid pace”.
Even factoring in June’s unexpected lower inflation rate of 2.6%, this is still seven times higher than the average variable cash ISA rate, which is now down around 0.34%, Cox noted.
“A dip in inflation is of little consolation to savers as cash ISA interest rates continue to fall.
“Against this backdrop it’s inevitable that people look elsewhere for yield and we have seen a sharp increase in the numbers upping their appetite for risk and moving their cash ISA into the stock market.”
HL’s ISA investors’ quest for yield in June also included passive products like Legal & General’s US Index and UK 100 Index Trust, as well as the BlackRock Emerging Markets Equity tracker.
And individual shares like Lloyds Banking Group, BT, Scottish Mortgage Investment Trust and healthy dividend provider Royal Dutch Shell also saw a steady flow of transfers last month.
“Everyone needs to hold some cash and shopping around for a better rate is a good starting point,” Cox added.
“After building firm cash foundations, the longer-term prospects of the stock market are simply far more attractive to beat the rising cost of living.”
