Where are savers putting their money this year?

In the run up to the end of the tax year, Fidelity Personal Investing commissioned a poll of ISA savers, where people were asked about their priorities for their annual allowances. The results are in.
 
Why hold stocks and shares, rather than cash?

73% of people who currently hold Stocks and Shares ISAs say that they hold them in order to get a higher rate of return on their savings, compared to holding their money in cash.

40% of people want to take advantage of the current higher tax allowances available to Stocks and Shares ISA savers than to cash ISA savers. The limits will be the same in new ISAs after July this year.

24% of people currently hold Stocks and Shares ISAs because they’ve already used up their cash ISA allowance.
 
Mark Till, Head of Fidelity Personal Investing, comments: “Savers are becoming increasingly frustrated by the poor returns available on cash. With interest rates continuing at historic lows, it’s easy to see why people are waking up to the drawbacks of saving through cash, and looking instead to invest in other assets through their ISAs. Having some cash on hand can be useful for making further investments throughout the year – where savers can take advantage of dips in the markets, which can mean a good time to buy – but don’t expect any decent returns on cash this year.
 
“For those savers who are keen to make the most of their tax allowance but haven’t quite decided yet where they’d like to invest, Fidelity Personal Investing has a Cash Park facility, where savers can keep cash until they’ve made up their minds. This isn’t designed for hoarding cash over the long term, but can buy you a bit of time to do your homework even after the April deadline.”
 
Active or passive?

68% of Stocks and Shares ISA holders said they would be more likely to choose actively managed funds, compared to just 9% who said they would choose passive ‘tracker’ funds.
 
Mark Till, Head of Fidelity Personal Investing, comments: “At Fidelity, we understand the benefits of active fund management, where investment professionals carefully select investments for portfolios, looking closely at specific companies and securities, rather than simply tracking a certain market. But we also understand that passive funds can add a good element of diversity to your ISA portfolio. They can help keep costs down, and add instant exposure to some of the world’s biggest markets.”
 
Which regions are savers including in their isas this year?

Just under half (47%) of the Stocks and Shares ISA savers we surveyed would choose to invest in the UK over the next year.

35% of investors are likely to invest in equities through their Stocks and Shares ISA over the coming tax year. 12% are keen to invest in fixed income.

17% of savers are attracted to equity income funds.

Of these savers looking for equity income funds, the majority (59%) would reinvest all their dividend income.

Tom Stevenson, Investment Director for Fidelity Personal Investing, says: “Savers are certainly looking more towards equities this year than bonds. As the global economic picture continues to improve, investors are feeling more confident – which often leads them back towards the stock market, and away from traditional ‘safe haven’ investments like bonds.
 
“There’s also a real appetite for savers for equity income. Income remains in short supply in an environment of generally low interest rates across the world. It’s encouraging to see that so many savers are aware of the benefits of reinvesting dividend income, as it is a major contributor to total returns over time.”