Sales of stocks and shares ISAs have returned to pre-pandemic levels at the start of the new 2021 tax year with the number of new policies taken out by investors in April up +39% on last year.
New data from Scottish Friendly’s Investment Index also shows that the value of new stocks and shares investments made in April 2021 increased +35% versus the same period in 2020.
The uncertainty caused by the outbreak of Covid-19 in early 2020 led investors to pull back from the market in the first three months of the year with stocks and shares policy sales down -20% on Q1 2019.
However, in the three months to March of 2021 policy sales of stocks and shares ISAs jumped by a massive +41%. The value of these new investments in Q1 2021 was also up 46% on the same period last year (see figure 1).
Meanwhile, quarter-on-quarter, the Index again shows increases in both sales numbers and investment value, which suggests investor confidence is growing.
The number of new policies opened by investors in Q1 2021 rose +6% on the previous quarter and the value invested in these new policies during the three months to March increased by +15% on Q4 2020.
The rise in investor activity in the three months to March has been largely driven by women. New policy value among female customers jumped +26% quarter-on-quarter compared to just +10% among men (see figure 2).
Equally, the number of policies sold to women increased by +10% between Q4 2020 and Q1 2021 while sales among men rose by just +1%. Moreover, the Q1 index reading of 110 is the highest quarterly sales figure among female customers since Scottish Friendly’s data recording began.
Kevin Brown, savings specialist at Scottish Friendly said:
The sharp increase in the number of policies opened by investors in April 2021 compared with last year shows how much has changed in the last 12 months.
In April 2020, households were still adjusting to the impact the pandemic was having on their lives and investor confidence fell massively. We saw a huge drop off in sales and in the amount of money being put into new stocks and share ISA policies, and it took time for things to recover.
However, fast-forward to the start of the 2021 tax year and the situation is a lot different. Many households have adapted to a new normal and are still able to take advantage of reduced spending opportunities to save and invest more than they would have done before the pandemic.
This is highlighted by the fact that the number of policies sold in Q1 2021 is the highest since we began recording the Index data more than two years ago.
During the coming quarters, once the usual seasonal demand we see in the run-up to the end of the tax year and the start of the next has died down, we would expect to see some decline in the amount households save and invest.
Overseas holidays may still be on hold for the time being but discretionary spending is still likely to rise sharply over the summer as the economy opens and people are able to spend more freely.
Remember that the value of investments can go down as well as up and you could get back less than you paid in.
Tax treatment depends on individual circumstances which can change in the future.