7th February 2013
Though figures from previous years demonstrate that more investors took out Isas in the few months running up to April, they are now bunching up even more towards the end of the tax year.
The firm suggests that investors would be much better phasing their investing over the course of the year rather than investing a lump sum in one go, they will be less vulnerable to dramatic market falls.
JP Morgan says there used to be a gradual and smooth pick-up in activity from the start of the calendar year to the end of the tax year, but that the last three years have seen declining net sales in March yet increasing sales in April as shown in the chart below.
Keith Evins, Head of UK Funds Marketing at J.P. Morgan Asset Management says: “The big spike in April sales could reflect ‘early birds’ investing their new year’s Isa allowance as well as those who have left it to the last minute. Because of the ‘use it or lose it’ nature of the Isa allowance, there will always be an element of seasonality in buying behaviour. But with studies consistently showing the value of regular investment, and the impossibility of knowing whether markets will plummet or surge the day after your lump sum goes in, we would argue that even if you have a lump sum you might be better off investing it in stages. For the many people who do not have a lump sum, regular investing – even if it is £50 a month – is an affordable way of building a meaningful savings pot for the future.”