Isa sales surge as over-50s rush to take up allowance

Investors rushing back into commercial property pushed Isa sales to a high, as figures from the Investment Managers Association showed there were more equity Isas opened in October than in any corresponding month since 2000.

The sales figures were boosted by investors flocking to take advantage of the first month in which the over-50s could use their increased ISA allowance of £10,200.

A gross total of £965m was invested in equity Isas in October. Net new investment in equity Isas was £301.1m, almost double September’s £162.3m total.

The IMA Property sector was the highest selling sector, accounting for £367.6m of net retail sales, the highest since May 2007. This move back into property comes in the wake of Nationwide’s announcement that UK property prices have risen for the seventh consecutive month.

”October was the first month in which the over 50s could use their Isa allowance - and it proved to be the highest ever October for gross Isa sales. Isa sales are clearly heading for their best year since 2002,” said Richard Saunders, chief executive of the IMA.

He said the figures point to increased investor confidence in equities and bonds, as well as renewed enthusiasm for the property market.

Equity funds remain the most popular choice among investors. The IMA recorded net retail sales of £655m, while bond funds attracted inflows of £496m.

Adrian Lowcock, senior investment adviser at Bestinvest said: “Commercial property was the highest selling sector as other investment firms caught onto the opportunity available.”

However, Mr Lowcock also cautioned against pouring too much money into the property sector, since “a strong flow of money into this sector can have a negative effect on the performance of some funds as the manager needs time to invest the new money.”

Outflows from the corporate bond sector also appear to indicate that investors are beginning to take on a bit more risk.