ASSETZ Capital investors are eschewing low-yielding cash ISAs in favour of stocks and shares ISAs and Innovative Finance ISAs (IFISAs), research has found.
A survey conducted by the peer-to-peer lender in August showed that its investors have an average of 44 per cent of their ISA portfolio in stocks and shares ISAs, followed by IFISAs at 37 per cent.
Cash ISAs now make up just 17 per cent of Assetz Capital investors’ average ISA portfolio, down from 52 per cent in the first quarter of the year and 37 per cent in the second quarter.
Just one per cent of their ISA portfolios tended to be in help to buy and lifetime ISAs.
Assetz Capital’s survey attracted responses from 910 investors.
“The IFISA has established itself as the option of choice for those who want fair target returns but without the volatility of the stock market,” said Stuart Law (pictured), chief executive at Assetz Capital.
“The cash ISA, on the other hand, continues to fall out of favour.
“I’d expect much of the 17 per cent share in cash ISAs to be made up of historical investments that are at risk of being transferred. We’ve seen over £20m of completed or in-progress transfers thus far and that figure will no doubt rise in the months to come.
“Investors in our platform are typically sophisticated and experienced – and understandably more likely to opt for IFISAs and stocks and shares ISAs – but our analysis points to a wider problem with the current cash ISA market. There’s very little value to be had, so investors are voting with their feet.”
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Cash ISAs have dwindled in popularity in recent years, amid historically low interest rates on savings accounts. Data released by HMRC in August showed that the number of cash ISAs opened over the 2017/2018 tax year fell by 8.2 per cent to 7.7m, with £39.8bn subscribed.
Earlier this year, Assetz Capital announced that £50m had been invested into its IFISA since its launch in December 2017. ISA investments now account for over 15 per cent of loans funded through the platform.