- 87% increase in the number of Cash ISA transfers to HL Stocks & Shares ISA (Jan - Jun 2017 compared to Jan - Jun 2016 – source HL Vantage ISA)
- Inflation running at 2.6% - seven times the average variable Cash ISA rate, now down to just 0.34%
- People continue to look to the markets for yield
- Most popular funds, trackers and shares for Cash ISA transfers
Analysis of transfer activity to the Hargreaves Lansdown Vantage Stocks & Shares ISA shows an 87% increase in the number of Cash ISA transfers to Stocks & Shares ISA in the first half of this year compared to the first half of last year.
The interest rate of sterling Cash ISA deposits including unconditional bonuses now 0.34% (source: Bank of England) in June 2017.
Danny Cox, Chartered Financial Planner, Hargreaves Lansdown:
“A dip in inflation is of little consolation to savers as Cash ISA interest rates continue to fall. Cash ISA investors aren’t waiting for the Bank of England to act and are taking matters into their own hands. The spending power of their cash is going backwards at a rapid pace and the best buy ISAs offer only just over half the interest needed to match rising prices, let alone beat them. The probability of a small interest rate rise this year has fallen from even stevens to 41% according to markets, but even then it would make little material difference to Cash ISA savers.
Against this backdrop it’s inevitable that people look elsewhere for yield and we have seen a sharp increase in the numbers upping their appetite for risk and moving their Cash ISA into the stock market.
Everyone needs to hold some cash and shopping around for a better rate is a good starting point. After building firm cash foundations, the longer term prospects of the stock market are simply far more attractive to beat the rising cost of living.”
Most popular active funds for Cash ISA transfers (June 2017)
- Lindsell Train Global Equity
- CF Woodford Equity Income
- CF Woodford Income Focus
- Jupiter India
- Fundsmith Equity
Most popular tracker funds for Cash ISA transfers (June 2017)
- Legal & General US Index
- Legal & General European Index
- Legal & General International Index Trust
- BlackRock Emerging Markets Equity Tracker
- Legal & General UK 100 Index Trust
Most popular FTSE 100 shares for Cash ISA transfers (June 2017)
- Lloyds Banking Group plc
- Scottish Mortgage Investment Trust
- Royal Dutch Shell Plc B Shares
- BT Group plc
- National Grid
It is now possible to transfer in either direction between a Cash ISA or a Stocks & 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 (£20,000 for 2017/18), and the valuable ISA wrapper is retained.
Cash ISA providers who will accept Cash from Stocks & Shares ISA transfers are limited. The best rates are often for subscriptions rather than transfers. No such restrictions apply to the majority of Stocks & Shares ISA providers.
80% of the 12.6 million ISA accounts subscribed to in 2015/16 were Cash ISA, with £58.7 billion saved into Cash ISA compared to £21 billion into Stocks & Shares ISA (source: HMRC).
The ISA allowance of £20,000 limit can be split between Cash and Stocks & Shares in any combination.