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Investors switch to stocks and shares as cash ISA rates plummet

10 March 2009 / by Rachel Mason
ISA investors are taking a 'bullish' approach to investing in equities, according to Barclays Stockbrokers.

According to the latest research from the UK's leading retail stockbroker, 45 per cent of stocks and shares ISA investors have already invested the full £7,200 ISA allowance this year and more than a quarter plan to increase their exposure to equities as a direct result of falling cash ISA rates.

The survey, which looked at the investment plans of 483 Barclays Stockbrokers investment ISA clients, found that 42 per cent are reviewing their investment portfolios, 74 per cent plan to invest the same as they did last year and 20 per cent plan to invest more.

Barclays Stockbrokers has revealed that so far this year, far from being scared off by falling markets, its share dealing clients are fully capitalising on market volatility, pushing the buy sell ratio to 63 to 37.

The firm has also seen a 67 per cent increase in the number of new opened in 2009 compared to 2008, while top ups to current tax year ISAs have seen an increase of more than 100 per cent.

“Our research shows cash is no longer king. Whilst interest rates continue to be low, informed investors are taking advantage of the potential long term returns from investments," explained Barbara-Ann King, Head of Investment Strategy at Barclays Stockbrokers,

"It is encouraging that not only have the majority of our clients invested their full
ISA allowance this year, but that a fifth of our clients are bullish in their outlook for investing in equities in the next tax year, and that shares currently account for around 80 per cent of our ISA investments."

Ms King says that for investors who can afford to take a long term view, Investment ISAs can "offer a route into the market".

She continued, "We are delighted to see investors actively taking advantage of their tax free allowance despite market volatility, and it’s encouraging to see their outlook remains positive for the next tax year.”

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