The average stocks and shares ISA fund fell 13.3% in the 2019/20 tax year, its worst performance since 2008/09 when falls of 20.3% were posted.

Apart from the financial crisis and in 2002/03 when investment ISAs fell 19.7%, last year’s performance was the third worst.

By fund sector, UK equity funds were adversely impacted, with the average UK Equity Income fund falling by 26.9%, UK All Companies funds fell by 25.5% and UK Smaller Companies funds dropped by 20.6%.

European Smaller Companies (-20.6%) and Japanese Smaller Companies (-23.6%) were the only other fund sectors that posted comparative losses. By contrast, UK Gilts (12.2%) and Global Bonds (6.7%) were the best-performing ISA fund sectors.

However, despite the latest fall, stocks and shares ISAs delivered positive growth in 14 out of 21 tax years since they were introduced in 1999, data from Moneyfacts reveals.

In comparison, cash ISA savers received an average rate of 1.21% in the last tax year.

Richard Eagling, head of pensions and investments at Moneyfacts, said: “These are extraordinary times for investors, as shown by the fact that cash ISAs outperformed the average stocks & shares ISA in the 2019/20 tax year.

“The coronavirus pandemic means that stock markets are experiencing unprecedented volatility and investment returns across most fund sectors have naturally been hit hard. As dismal as the last tax year has proved to be for investors, it is unlikely to dampen enthusiasm for stocks & shares ISAs too much, as their long-term case remains compelling.”