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Trading Lessons

Stocks & shares ISAs Deliver Weakest Performance Since 2008 Financial Crisis

Personal_Finance / ISA's Apr 04, 2016 - 12:40 PM GMT

By: MoneyFacts

Personal_Finance

· The average performance of a stocks & shares ISA has fallen by 2.7% during the 2015/16 tax year so far, the worst growth since the 2008 financial crisis.

· This compares with an average cash ISA rate of 1.44% over the same period.

· The average stocks & shares ISA has failed to deliver positive growth in seven of the 17 tax years since the introduction of ISAs in 1999.


As the 2015/16 tax year draws to a close, new research by Investment Life & Pensions Moneyfacts has revealed the extent to which stocks & shares ISA performance has suffered during what has been a testing period for stock markets.

As things currently stand, 2015/16 is on course to be the worst tax year for stocks & shares ISA performance since the 2008 financial crisis. The average stocks & shares ISA fund has fallen by 2.7% so far this tax year (see Table 1), the biggest fall since the 2008/2009 tax year when the average loss was 20.8%. By contrast, the average interest rate on cash ISAs (both fixed and variable rate) during the course of the 2015/16 tax year is 1.44%.

Highlighting the challenging environment that has faced investors in the current tax year is the fact that just 232 out of the 1,009 ISA funds surveyed (22%) have delivered growth during this period. In terms of Investment Association sectors, the standout ISA performers during the current tax year have been UK Smaller Companies (8.5%), European Smaller Companies (6.3%) and Japanese Smaller Companies (5.1%). At the other end of the spectrum, China/Greater China (-12.8%), Global Emerging Markets (-10.5%) and Asia Pacific Excluding Japan (-9.5%) suffered the heaviest losses.

While the 2015/16 tax year figures may be disappointing, there is still a strong case for investing in stocks & shares ISAs over the long term. This is demonstrated by some of the other findings from our latest ISA survey:

• The average stocks & shares ISA fund has grown by 175% in the 17 years since the introduction of ISAs. The best performing ISA fund over that period (Marlborough Special Situations) has posted growth of 1,833%.

• Only three funds out of 434 stocks & shares ISA funds that have been available since ISAs were first introduced have delivered a loss. All bar three funds have delivered double-digit growth.

Richard Eagling, Head of Pensions and Investments at Moneyfacts, said:

“The heightened market volatility and ongoing uncertainty facing the global economy has naturally had an adverse impact on the performance of most stocks & shares ISAs, with the vast majority failing to deliver positive growth this tax year. This has led to the unusual position whereby savers would have achieved a better return from a cash ISA in the 2015/16 tax year, even though these rates are at record lows. However, there is still a compelling argument for investing into a stocks & shares ISA, as demonstrated by the returns posted over the longer term.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.


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