April 11, 2024

Chart of the Week – In The Year 2525

By Nathan Sweeney

Welcome to the Chart of the Week.

 

This week’s chart highlights the amount of money subscribed to adult ISAs during the financial year. This year marks the 25th anniversary of the ISA’s launch. From 2021 to 2022, the market value of Adult ISA holdings stood at £741.6 billion. Cash ISAs account for 38% of the market value, so that’s £281 billion held in cash ISAs. As an investor, this is very disappointing.

So, let’s highlight the advantages of long-term investing compared to holding cash.

For example:

  • If an investor had maximised their ISA allowance every year since 1999, they would have contributed £306,650 into their account.
  • If that money had been invested in a Global Stock Portfolio, that £306,650 would have grown to £723,357.
  • If the same amount had been invested into just cash, it would now be worth £355,592.
  • Sadly, from 2021 to 2022, £1.5 billion was subscribed to Junior ISAs, around 42% of which was in cash.
  • If you expect inflation to be higher in the future, then this only increases the argument for investing.

I often get asked about investments, particularly around this time of year, as people consider what to allocate to in their ISA.

The chart above shows the return you would have achieved if you had invested £20,000 (and nothing else going forward) in the Marlborough UK Special Situations Fund when it launched in 1995 and let it grow.

The following springs to mind:

  • Investing in cash in a tax-free vehicle like an ISA doesn’t make sense. It would be best to try to maximise your returns, as no tax applies to capital gains, no matter how big.
  • As for what to buy, the FundCalibre research team has looked at the success of the ISA-eligible funds that have delivered the best returns over the past 25 years.
    The top-performing retail investment fund was the UK-focused IFSL Marlborough Special Situations. Launched in July 1995, it has delivered a 2,643% return over the past 25 years.
    An investor who had put their £7,000 ISA allowance into this fund in 1999 would now have a pot of £192,026. In comparison, someone who saved the £7,000 in a cash ISA would have about £14,656 now.
  • ISA’s are a bit of a political hot potato, so you should be looking to take full advantage of these tax-free vehicles before somebody decides to change the rules.

My goal is to ensure we have a world-class multi-asset offering for our clients, and that’s because I follow in the footsteps of greatness. Our single-strategy funds are unrivalled over the long term.

Takeaway: Speaking to a financial advisor will help you to implement a financial plan that is right for you.

 

Did you know: The capability of new artificial intelligence models will surpass human intelligence by the end of next year. Click here.

Marlborough Podcast: This week, we discuss the US jobs report, economic divergence & rate-cut expectations. Click here.

 


 

Author: Nathan Sweeney, CIO Multi-Asset, Marlborough Group

Source: Marlborough Multi-Asset Investment Team, GOV.UK, Morningstar, YourMoney, FT

Important Information: This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Clever to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. You should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine – together with your own professional advisers if appropriate – if any investment mentioned herein is believed to be suitable. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice.

All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. Issued by Clever Adviser Technology Ltd (Clever), a company registered in England and Wales (company number: 2910523) with registered office at Watergate House, 85 Watergate Street, Chester, Cheshire CH1 2LF.

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Nathan Sweeney

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