ISA investors search for income growth

New research from online stockbroker and fund supermarket Interactive Investor shows that ISA investors are looking further afield in their pursuit of high income growth.

Figures reveal that nearly a quarter (24%) of investors plan to invest in new emerging markets such as Africa and Vietnam this year, a 52% increase on 2010. The research also reveals that four in ten investors (41%) expect to invest in established emerging markets in 2011 and 38% plan to invest in natural resources and commodities.

Rebecca O'Keeffe, Head of Investment at Interactive Investor, said: "The growing interest in new emerging markets underlines the belief among investors that these areas may well offer good growth potential. Our investors have been investing in established emerging markets and commodities funds for over five years, generating significant returns. Whilst many will continue to invest in these areas, some have already started to look at newer opportunities - fundamentally following the principle that it is better to look for future performance rather than relying on past performance."

UK companies still prove a popular investment
 
The research from Interactive Investor also reveals that UK companies remain popular with investors. Two thirds (67%) of respondents said they plan to invest in UK companies this coming year, up from 60% last year.

Rebecca O'Keeffe adds: "The sustained interest in UK companies should not be a huge surprise. Alongside the fanfare around new investment hotspots, the majority of retail investors realise that a balanced portfolio, with the potential for a decent return, may well include UK companies.

"The fact that investors know UK companies well cannot be ignored. They recognise the names, read about them regularly - many probably buy or use their products and services. That familiarity undoubtedly brings a level of reassurance, which is why they form the bedrock of the majority of UK investment ISA portfolios.

"The overall picture here is that investors are much savvier about the opportunities out there. Ten years ago, the average ISA investor would probably have held a UK only fund. These figures show that they are now increasingly willing to explore new areas to diversify their portfolio."