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Coalition government 'will boost investment sales'

  • Advisers believe coalition will be good for investment despite CGT change, Virgin Money’s Investors Intentions Index shows

Investment sales will continue to rise despite the Conservative/Liberal Democrat coalition’s plan to raise Capital Gains Tax, new research* from Virgin Money’s authoritative Investor Intentions Index shows.

Around one in three (30%) IFAs believe clients will increase their investments according to the nationwide survey conducted in the week after the General Election result showed no party with an overall Parliamentary majority.

Analysts are predicting the planned increase in Capital Gains Tax in Chancellor of the Exchequer George Osborne’s 22 June Emergency Budget will make investments in unit trusts and OEICS less attractive, with the rate expected to rise to “close to 40%” and possibly as high as 50%.

However plans to increase the Capital Gains Tax rate for collective schemes such as unit trusts and OEICS is potentially good news for other investment products such as investment bonds.

The research shows 17% of advisers still believe investment sales will continue to rise following the General Election while 51% believe the result will make no difference. And advisers polled after David Cameron became Prime Minister were more optimistic – 30% said they expected an increase in investment sales.

Virgin Money spokesman Grant Bather said: “Retail sales of investment funds have hit record highs with the best quarter on record in 2010 so it is almost inevitable that we might see a pause for breath.

“Advisers are saying that they believe sales will continue to rise so it is clear that a lot hinges on the Budget on 22 June to set the tone for the investment market in the UK for the rest of the year.

“The Government has won early backing and it was striking how the research changed as Prime Minister Cameron moved into office. However the continuing crisis in the Eurozone has meant the FTSE has fallen around 5% and that may make investors more cautious.”

Virgin Money’s authoritative Investor Intentions Index tracks the confidence of independent financial advisers across the country in 10 different investment sectors as well as where they advised their clients to invest their money over the preceding quarter.

The Virgin Money Investor Intentions Index tracks 10 sectors in total. These are: UK Shares, European Shares, Green Investments, Cash, Commodities, Property, Bonds, Far East, Emerging Markets and Gold. The Index details advice over the last 3 months and investment intentions for the next quarter (tables).

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* IFA interviews were conducted by George Street Research in May 2009. A total of 100 interviews were completed amongst a cross-section of advisers throughout Great Britain with a weighting towards those whose business is primarily with investment clients. Quotas were imposed on the total sample in respect of size of IFA firms, region and areas of specialisation.

For further information:

Grant Bather at the Virgin Money Press Office
Grant.Bather@virginmoney.com
07834 844 427

Kevan Reilly/Chris Jarvis/Toby Clark, Citigate Dewe Rogerson
Tel: 0207 638 9571

About Virgin Money:

Virgin Money is Virgin's banking and financial services arm and was established in 1995 as a joint venture between the Virgin Group and Norwich Union.

In 1997, Virgin Direct Personal Financial Services Limited launched The Virgin One Account, a joint venture with The Royal Bank of Scotland that offered the UK's first current account mortgage direct to the retail market. In 2001, RBS bought out the Virgin Group's stake in the joint venture.

In April 2004 the Virgin Group took 100% ownership of Virgin Money.

Virgin Money currently has over 2.5 million customers and offers Payment Cards (Credit Cards & Prepaid Cards), Savings and Investment products (Stakeholder Pensions, Children's Pensions, Employers Pensions, FTSE Tracker ISA, Bond & Gilt ISA, Climate Change ISA, Cash ISA and Unit Trusts), General Insurance products (Motor, Home, Travel, and Pet) and Life Assurance products to the UK market.

Virgin has signed a five-year deal to be the official sponsor of the London Marathon, the biggest annual fundraising event in the world. The inaugural Virgin London Marathon was held on 25 April 2010. Virgin Money is leading the London Marathon sponsorship with the ambition to help runners raise £¼ billion over 5 years and will use its infrastructure, online capability and financial expertise to deliver that through Virgin Money Giving.