Experienced Investor
Cash ISAs are king as market volatility hits stocks and shares equivalents
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Emma LunnStocks and shares ISAs have taken a hit over the past year, while cash ISAs have seen better returns.
The average stocks and shares ISA fund experienced a loss of 3.27% between February 2022 and February 2023, according to Moneyfacts research in collaboration with Lipper IM.
This should not be much of a shock considering the significant volatility felt across the markets over the past year, but it does emphasise the importance of keeping track of investments and ongoing fund performance.
In comparison, the Moneyfacts average cash ISA rate returned 1.71% in the same period thanks to increased competition in the sector and consecutive Bank of England base rate rises.
In February last year, the base rate stood at 0.50%. But there have since been eight increases to the rate and it’s now at 4%.
In response, the average easy access cash ISA stood at 0.26% last February and has since increased to 1.85%.
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Market volatility
Most primary fund sectors returned a loss over the past 12 months. The worst-performing stocks and shares ISA fund sector came from UK Index Linked Gilts, which lost more than 32% on average.
However, some sectors did experience growth, as Commodities and Natural Resources was the best-performing sector. It grew by more than 24% on average for its investors.
But Moneyfacts warns that those considering stocks and shares must keep in mind that past performance is never guaranteed to be reflected in future returns, so it’s vital investors are comfortable with their level of risk.
Cash ISAs remain popular
Cash ISAs are traditionally a more popular choice among savers, but some investors may well be reconsidering their attitude to risk in hopes of growing their pot over the longer term.
HMRC data showed a rise in the number subscribed to stocks and shares ISAs between 2020 and 2021, but cash ISAs held the majority share.