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Investors turning to JISAs as Government mulls CTF transfers

15th April 2013 Print

Junior ISAs (JISAs) are rapidly overhauling Child Trust Funds (CTFs) as the investment vehicle of choice when it comes to saving for children, according to the latest Halifax Share Dealing Market Tracker.
 
CTFs are still the most common investment among those investing on behalf of children, with almost half (48.3%) of these investors saying they are still actively investing in them.
 
However, they have been closed to new business from 2011 and investment into JISAs - the product which superseded them - is rapidly catching up. More than a quarter of those investing on behalf of children (27.6%) say they are putting money into a junior cash ISA, and 10.3% are investing in a junior stocks and shares ISA. In addition, 13.8% are investing in a regular stocks and shares ISA in their own name specifically on behalf of children.
 
Providing a good start
 
Nearly half of those investing on behalf of children say the primary purpose is as a general savings vehicle (48.7%). However, a third (33.3%) say it is for the child's education (college/university etc), and 12.8% far-sighted investors say it is intended to help the child to purchase their first house.

Damian Stansfield, Halifax Share Dealing, comments: "The CTF scheme remains popular among those who have one, but it is now closed to new entrants so it not a growing market. Among our investors we're seeing that both cash and stocks & shares JISAs are proving to be a successful replacement with new entrants seeking the benefits of tax free savings.
 
"The current rules prevent children with a CTF from opening a Junior ISA, but the options for transferring savings held in CTFs into JISAs are now being consulted on. It will be interesting to see what happens if these rules change as CTFs still hold some advantages over JISAs.
 
"Whatever happens here the important thing is that if investors are not currently saving for their children and are able to do so then even modest regular investments could grow in time to provide help with a first car, further education or even a first house."
 
Investors swing towards technology
 
Investment in the energy & mining sector shrank last month and, even though it remains the most widely held investment among investors, compared to last year the number of investors with exposure here has reduced by 14.2%.
 
The computing, information technology & internet sector remains outside the top five most popular sectors, although investors were flocking back here in March with 33.6% of investors owning stocks here up 20.4% from February.
 
On an annual basis, general industries demonstrated the biggest gain, with 16.5% more investors invested here than in March 2012, and 36.7% of investors now owning stocks.

The outlook for the year ahead remains positive, as 64.5% of investors believe the FTSE will be higher in 12 months time compared 60.3% in February. Looking at where investors are thinking of investing in the next six months, 47.7% say they are looking to invest in energy & mining, with 32% looking to invest in basic industries (chemicals, construction, building materials etc).
 
Damian Stansfield added: "While just 57.8% of investors reported seeing an increase in the value of their share portfolio in the last half year - compared to 72.1% in February -  investors say their outlook for the next half year remains positive.
 
"Investors remain particularly bullish on energy & mining stocks and also financial services. Having had a strong last 12 months, investors indicate they feel there is still some play to be had here."