ISA investors continue to seek returns from equities

In the midst of prolonged market volatility, investors still see opportunities for better returns by investing directly into the markets, according to research from Barclays Stockbrokers. Investors intend to place the overwhelming majority of their ISA investments (89%) next tax year into risk based investments . Moreover, equities remain the most popular investments for Barclays Stockbrokers clients, with banking stocks and other financials continuing to dominate.

The research found two thirds (66%) of investors surveyed had invested in an Investment ISA this tax year, and of those almost half (45%) had invested the full £7200 allowance. The majority of investors (85%) are planning to invest into an Investment ISA in the next tax year (2009/10) with just over two fifths (41%) believing they definitely will.

However, there are a significant number of customers (41%) who are more cautious than they were previously. In response to investors' demand, Barclays Stockbrokers has seen a 187% increase in Investment Note uptake this year compared to the same period in 2008. At a time when many investors are unsure of which direction the FTSE index may be moving Barclays stockbrokers is launching the Five Year Target Return Investment Note from 23 March 2009. The Investment Note offers a return of 55% at maturity in five years, payable provided that the FTSE 100 has not fallen at any time during the term below a level 50% from its starting point. However, capital repayment and the return will be reduced if the FTSE 100 has fallen below a level 50% from its starting point, in which case it must recover to starting level by maturity to avoid erosion.

The Five Year Target Return Investment Note is available exclusively from Barclays Stockbrokers until 6 April 2009.

Barbara-Ann King, Head of Investments at Barclays Stockbrokers, says: "While the ongoing market volatility of recent months has clearly taken its toll on investor confidence, our research shows that there's still a place for equities in investors portfolios and the overwhelming majority of our customers continue to see value and opportunity in the markets into the next tax year. We have seen a 63% increase in account openings for our Investment ISA5 compared to the same period last year.

"Our clients continue to favour equities when it comes to trading and we have also seen a significant increase in clients investing in iShares, with the FTSE 100 being the most popular. What is particularly interesting is that these instruments are being traded both intraday as well as being bought and held for longer term value. This suggests investors see iShares as a useful tool to take short term positions on the index as a whole. Exchange Traded Commodities are remaining popular, with a focus on gold where investors have been seeking diversification for their equity portfolios and oil, which has represented significant ETC trading volumes this year.

"For the 41% of investors who have indicated that they are more cautious than befpre about their investments, and are seeking some form of protection for their capital, Investment Notes offer a good opportunity to receive enhanced returns whilst having the comfort of knowing that the index needs to fall from the current levels before their capital will be eroded. In the current uncertain markets some investors have indicated that they are unsure whether the markets will be up significantly in five years time, and so we have launched a Note which offers 55% over five years - a particularly attractive return in the current markets without any requirement that the FTSE 100 have risen."