Renewed market stability encourages rise in investment

04 June 2008 / by Rachael Stiles
The new tax year has brought with it a renewed confidence in investment funds, as the Barclays Stockbrokers Fund Market increased by 23 per in April compared to March.

ISA investors remained cautious towards the end of the last tax year, but signs that stability might be returning to the markets has sparked renewed confidence, according to Barclays Stockbrokers.

The assets invested in funds rose 23 per cent in April compared to the previous month, and this trend continued into the next month as well, it said.

And, while ISA investors were cautious in the last financial year, this year 39 per cent of them intend to use their ISA allowance in funds, and 63 per cent are determined to take advantage of their tax free savings ISA allowance this year.

The Money Market and Fidelity Cash fund sectors were those most favoured by investors in April, with Income and Bond funds also remaining popular investment options.

The Absolute Alpha fund also did well, reflecting investor's eagerness to find new methods of combating the potential effect of market volatility, because it is designed to perform in both rising and falling markets.

"ISA season was dominated by market volatility and there wasn’t the usual flurry of fund sales in the approach to tax year end." said Chris Stevenson, associate director of the funds market at Barclays Stockbrokers. "But with apparent stability returning to the market it is encouraging that investors are beginning to get back in and are making the most of their new ISA allowance.

"We have also seen significant inflows throughout May as well, suggesting this trend is set to continue. While unsurprisingly the more cautious funds continue to dominate, investors are also looking at specialist sector funds to gain returns from exposure to commodities and emerging markets, which suggests a renewed confidence in the markets."

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