Use it or lose it - and beat low rates
- Bond funds deliver annual yields of 5.06%, says Virgin Money
Record low average interest rates on cash ISAs and ongoing stock market volatility will mean millions of savers deciding to lose it rather than to use it when the 2008/2009 tax year comes to an end, warns Virgin Money.
But the finance firm says savers can use their £7,200 tax-free savings ISA allowance and not lose if they opt for the halfway house of Bond and Income funds.
Its Bond and Gilt Fund has seen yields of 5.06% over the past year and outperformed the Strategic Bond Sector by over 1,100 basis points from March 2008 to 17 March 2009. Investors have seen income from the Fund and have been protected from the worst of the stock market slide.
That contrasts with the experience across other parts of the savings and investment market. Bank of England figures show average cash ISA rates hit 0.96% at the end of February.
And Equity markets continue to struggle with few equity unit trust sectors showing positive average returns over the past year and some such as UK Smaller Companies losing as much as -39.28%.
Grant Bather of Virgin Money says: "Looking for silver linings among the clouds over savings and investment markets at the moment is extremely time-consuming and potentially very risky.
"However the end of the tax year and the offer of the ISA allowance is an opportunity to focus on long-term saving no matter what the current conditions.
"Income funds are a good way to ensure you use your ISA limit and don’t lose it, without putting your money at too much risk. They offer the prospect of income which beats cash ISAs and protection from the worst of the equity swings and roundabouts."
The latest Virgin Money Investor Intentions Index shows bonds are the only sector to show signs of confidence in the current markets. Compared to when the Index began last year more IFAs recommended investing in Bonds in the past three months, and more will recommend investing in Bonds in the coming three months.
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Notes to Editors
For further information:
Grant Bather, Public Relations Manager, Virgin Money
07834 844 427
Kevan Reilly/Billy Partridge, Citigate Dewe Rogerson
0207 638 9571
About Virgin Money
Virgin Money is Virgin’s financial services arm and was established in 1995.
Virgin Money has over two million customers and offers a wide range of financial products across lending (e.g. credit cards and personal loans), savings (e.g. deposits, investments and pensions) and protection (e.g. life insurance, home insurance and car insurance) to the UK market.
Virgin Money Personal Financial Service Ltd is authorised and regulated by the Financial Services Authority (FSA). Registered Office: Discovery House, Whiting Road, Norwich NR4 6EJ. Registered in England no. 3072766. Entered on the Financial Services Register (www.fsa.gov.uk/register), Register Number: 179271