Retail investors look to funds as returns on cash dwindle

Research from TD Waterhouse, one of the UK's leading execution-only brokers, shows that customers are taking an eclectic approach to their ISA investments this year in an attempt to make the most of the current economic conditions. Currently, the most popular funds held in a TD Waterhouse Trading ISA and TD Waterhouse Regular Investment ISA are those that mix risk with income.

Angus Rigby, CEO, TD Waterhouse comments: “With the lowest interest rates on record in the UK and continued volatility in the global markets, our customers are taking a much more diversified approach to their ISA selection this year. The Blackrock Gold and General Account is currently the most popular choice among our ISA investors and it is also interesting to see portfolios with a varied mix of asset allocation and country specification. Emerging markets such as China seem to be popular ISA investment options with our customers choosing funds such as Gartmore China Opportunities and Fidelity Global Special Situations.

“This trend is supported by results of our recent 2008/09 TD Waterhouse Investor Confidence Index, an independent survey of retail investor confidence in the UK, which showed that 38% of respondents are more likely to invest in Asia over the next 12 months.”

Overall, ISAs remain the preferred investment option among savers and the popularity of stocks and shares ISAs has increased year on year. The TD Waterhouse Investor Confidence Index also showed a 10% increase in stocks and shares ISA investment in the 12 months to November 2008. Over half (58%) of respondents have invested in this type of ISA in 2008, compared to 48% in 2007 and 41% in 2006 while nearly four in ten (38%) indicated they have a regular monthly investment plan.

Angus Rigby continues: “Six successive interest rate cuts have left investors reeling as returns on cash dwindle. Many of the funds bought and sold within a TD Waterhouse Trading ISA or Regular Investment ISA can help shrewd investors to diversify their holdings so they can also be used to hold unit trusts, shares, investment trusts, gilts or bonds. This also enables investors to broaden their horizons when managing their portfolio to include more exotic funds or markets they may not have previously considered and at no additional cost.

“Of course, fund investment is not without risk but there are varying degrees of risk to suit each individual investor’s appetite. In addition to this, investing in funds is not necessarily an expensive alternative to cash. TD Waterhouse trading charges do not apply to funds and our customers can choose from over 1,120 discounted funds from 35 of UK’s leading providers, over half of which come with a 0% Initial Sales Charge.”

There is no annual administration fee charged on a TD Waterhouse Trading ISA with a balance in excess of £3,600 (an annual administration fee of £30 + vat is charged on ISA’s with a balance up to £3,599.99). The annual administration is not charged on a TD Waterhouse Regular Investment ISA - regardless of the balance.

On Monday, 16th March, the TD Waterhouse Investor Centre, London is hosting a seminar on Collective Investment Schemes – Unit Trusts, OEICs and Investment Trusts, and on Tuesday, 24th March they will be hosting a seminar on Regular Investing. TD Waterhouse seminars are free with no obligation. For more information, visit tdwtaterhouse.co.uk/learn/seminars.

For information about online trading or longer-term investment opportunities customers can visit tdwaterhouse.co.uk.