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Subdued Stocks & Shares ISA Performance Still Outshining Cash ISAs

Personal_Finance / ISA's Mar 27, 2018 - 02:12 PM GMT

By: MoneyFacts

Personal_Finance

  • The average stocks & shares ISA fund has grown by 4.8% during the 2017/18 tax year so far – a considerably weaker performance than the growth of 20.4% posted in the 2016/17 tax year.
  • This still compares favourably with the average cash ISA rate of 0.97% over the same period.
  • The average stocks & shares ISA has now delivered positive growth in 12 of the 19 tax years since the introduction of ISAs in 1999.

As the 2017/18 tax year draws to a close, new research by Investment Life & Pensions Moneyfacts has revealed how stocks & shares ISAs have delivered a more subdued level of performance during the current tax year.

As things currently stand, the average stocks & shares ISA fund has grown by 4.8% during the 2017/18 tax year (see Table 1), significantly lower than the average growth of 20.4% posted in the previous tax year. However, this is still higher than the average interest rate on cash ISAs (both fixed and variable rate) of 0.97% during the current tax year.

Although the average stocks & shares ISA return is lower this tax year, it does mask some strong individual fund and sector performances. The standout ISA performers during the current tax year have been Japanese Smaller Companies (25.5%), China/Greater China (24.7%) and UK Smaller Companies (15.3%). Once again, the vast majority (83%) of the 945 ISA funds surveyed have delivered growth over this period. Furthermore, while the performance of stocks & shares ISAs during the 2017/18 tax year may have dipped the case for investing in them over the long-term remains compelling. This is shown by the fact that the average stocks & shares ISA fund has grown by 251% in the 19 years since the introduction of ISAs.

Richard Eagling, Head of Pensions and Investments at moneyfacts.co.uk, said:

“Even though the 2017/18 tax year has been a more difficult environment for stocks & shares ISAs, they are still outshining the returns offered by their cash equivalents. The nature of investing in the stock market will always involve fluctuating returns but the long-term performance of stocks & shares ISAs remains attractive. The 2016/17 tax year saw record subscriptions to stocks & shares ISAs and a collapse in the cash ISA market, so it will be interesting to see whether the recent volatility in the markets dampens investor enthusiasm for this type of ISA.”

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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