- 50% increase in the number of cash ISA transfers to HL Stocks & Shares ISA (August 2016 compared to August 2015 – source HL Vantage ISA)
- Savers are shunning low interest rates on cash in search of better returns
- Savers dreading the prospect of another interest rate cut on Thursday
- Most popular funds, trackers and shares for cash ISA transfers
Analysis of the transfer activity from cash ISAs to the Hargreaves Lansdown Vantage Stocks and Shares ISA shows a big increase in the numbers of cash to stocks and shares transfers as a result of the Bank of England base rate cut.
Danny Cox, Chartered Financial Planner, Hargreaves Lansdown:
“The Bank of England’s decision to cut interest rates at the beginning of August clearly shone a light for cash ISA savers that interest rates are not going to rise anytime soon. It’s hardly a surprise we have seen a sharp increase in numbers of cash ISA investors showing an appetite for stocks & shares. A further rate cut of Thursday would be meaningless in the context of borrowing costs and economic stimulus, but would act as another hammer blow for the saver.
Apathy is the savers’ enemy. Too many leave their accounts untouched for years, despite expiring bonus rates, incentives and diminishing returns - 80% of those with easy access accounts haven’t switched for 3 years (source: FCA). Shopping around for a better rate is a good starting point cash savings. Higher rates are usually available for those who are happy to lock their money away for a fixed term but rarely do these add sufficient extra interest value for the inflexibility.
Cash is the bedrock of portfolio planning but the longer term prospects of the stock market are simply far more attractive than below inflation interest rate returns.”
Most popular active funds for cash ISA transfers (August 2016)
CF Woodford Equity Income
HL Multi-Manager Income & Growth Trust
Lindsell Train Global Equity
HL Multi-Manager Special Situations Trust
Most popular tracker funds for cash ISA transfers (August 2016)
Fidelity Moneybuilder Income
Legal and General International Index
Legal and General US Index
Vanguard Lifestrategy 20% equity
Legal and General UK Index
Most popular shares for cash ISA transfers (August 2016)
British American Tobacco
Legal and General
Lloyds Banking Group
Sirus Minerals plc (AIM)
It is now possible to transfer in either direction between a cash ISA or a Stocks and Shares ISA. Transfers are straightforward and can usually be instructed by completing a simple form or online instruction provided by the company the ISA is being transferred into.
Transferring does not affect an individual’s ISA allowance for the current tax year (£15,240 for 2016/17), and the valuable ISA wrapper is retained.
Cash ISA providers who will accept cash ISA transfers are limited. Banks and building societies generally don’t need additional funding, so the best rates are often for subscriptions rather than transfers. No such restrictions apply to the majority of stocks and shares ISA providers.
80% of the 12.6 million ISA accounts subscribed to in 2015/16 were cash ISA, with £58.7 billion saved cash ISA (source: HMRC).
The ISA allowance of £15,240 limit can be split between cash and stocks and shares in any combination.
This calculator can help investors with their planning, estimating what their ISA might grow to in value over time.
NOTES TO EDITORS
Globelynx and ISDN ready
Hargreaves Lansdown is equipped with a live in-house broadcast camera via the Globelynx network and has an ISDN line available for radio interviews - 0117 934 9006. To arrange an interview with a Hargreaves Lansdown spokesperson please contact the person you wish to speak to directly using the contact details above, or call Globelynx on 0207 963 7060 or email email@example.com.