Savers in Scotland rush to invest in stocks and shares ISAs as sales bounce back strongly after a subdued first quarter
– Scottish Friendly’s New Investor Index reveals a surge in the number of new investments into stocks and shares ISAs (+31%) in Scotland in Q2 2020
– The value of all new investment from savers in Scotland increased by +64% between the first quarter and second quarter of 2020
Investment in stocks and shares ISAs rebounded quickly in Scotland in the second quarter of 2020 after a sharp drop in the number of policies opened during the first three months of the year.
The inaugural New Investor Index from ISA provider Scottish Friendly reveals that the volume of new investment into stocks and shares ISA subscriptions in the country rose by +31% in the three months to June, after falling by -28% in the first quarter (see figure 1).
The New Investor Index tracks sales of adult investment ISAs and the total value of new policies among Scottish Friendly’s UK-wide customer base, with quarterly activity measured against a base rate of 100.
It reveals that there was a surge of activity across the UK during the second quarter of 2020, with the total number of people investing into a stocks and shares ISA increasing by +40% on Q1 (see figure 3).
Meanwhile, the total value of new investment in the UK increased by +71% in the three months to June, while in Scotland new investments rose in value by +64% (see figure 2).
The outbreak of Covid-19 and the start of lockdown in March coincided with a -22% drop in UK sales of investment ISAs between Q4 2019 and Q1 2020. There was also a -31% reduction in the value of investments among all new and existing customers between the two quarters.
However, as spending opportunities remained restricted during the height of lockdown, many people’s capacity to save began to increase.
Official data from the Office for National Statistics reveals that the UK household savings ratio soared to an all-time high of 29.1% in the second quarter of 2020, up from 9.6% in the first three months of the year.
In Scotland, the value of new investments in Q2 2020 was up by nearly a third (+32%) on the same period in 2019, which is higher than the UK average of +23%.
Kevin Brown, savings specialist at Scottish Friendly said: “We have seen a surge of new investment between April and June, following a period of relative inactivity in the first three months of the year.
“The initial shock of a major pandemic seemed to discourage investment in stocks and shares, but this has quickly given way to much higher levels of engagement as investors came flooding back in the second quarter.
“In Scotland, the number of new investments has increased significantly in the second quarter however numbers remain slightly below where they were before the pandemic struck.
“However, when you compare the second quarter of this year to Q2 2019, savers in Scotland are investing much more of their cash into stocks and shares ISAs.
“Although furlough led to many workers experiencing a drop in income and also to heavy redundancies, generally spending opportunities have been limited by the effects of lockdown restrictions.
“This has led to an increase in many Brits’ capacity to save, as official data shows, which has led to the rush of new investors to stocks and shares ISAs in Scotland.
“We expect our New Investor Index to show a slowdown in the level of investment as we head towards the end of the year, but there could be severe fluctuations as lockdown measures are dialled up and down over the next six months.”
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.
-ENDS-
Figure 1: Total sales of stocks and shares ISAs by region
|
|
New Policy Sales |
|||||||||||
|
Quarter |
East Midlands |
East of England |
London |
North East |
North West |
South East |
South West |
West Midlands |
Yorkshire and Humber |
Scotland |
Wales Cymru |
Northern Ireland |
|
Q1-2019 |
100 |
100 |
100 |
100 |
100 |
100 |
100 |
100 |
100 |
100 |
100 |
100 |
|
Q2-2019 |
94 |
97 |
87 |
94 |
91 |
99 |
97 |
83 |
93 |
114 |
101 |
117 |
|
Q3-2019 |
83 |
104 |
92 |
118 |
96 |
98 |
99 |
96 |
111 |
114 |
106 |
113 |
|
Q4-2019 |
87 |
98 |
99 |
111 |
95 |
91 |
93 |
108 |
109 |
120 |
105 |
96 |
|
Q1-2020 |
68 |
79 |
75 |
83 |
74 |
73 |
87 |
76 |
82 |
87 |
81 |
62 |
|
Q2-2020 |
93 |
99 |
114 |
115 |
109 |
103 |
109 |
109 |
128 |
114 |
111 |
93 |
|
|
||||||||||||
|
Change from previous quarter |
+37% |
+25% |
+52% |
+39% |
+47% |
+41% |
+25% |
+43% |
+56% |
+31% |
+37% |
+50% |
Figure 2: Total value of all new investment into stocks and shares ISA by region
|
|
New Policy Value |
|||||||||||
|
Quarter |
East Midlands |
East of England |
London |
North East |
North West |
South East |
South West |
West Midlands |
Yorkshire and Humber |
Scotland |
Wales Cymru |
Northern Ireland |
|
Q1-2019 |
100 |
100 |
100 |
100 |
100 |
100 |
100 |
100 |
100 |
100 |
100 |
100 |
|
Q2-2019 |
88 |
104 |
92 |
84 |
98 |
122 |
94 |
84 |
67 |
99 |
102 |
102 |
|
Q3-2019 |
115 |
95 |
92 |
96 |
112 |
122 |
92 |
100 |
87 |
106 |
113 |
92 |
|
Q4-2019 |
113 |
80 |
100 |
114 |
114 |
85 |
67 |
125 |
90 |
129 |
120 |
88 |
|
Q1-2020 |
56 |
72 |
60 |
79 |
72 |
61 |
84 |
80 |
62 |
80 |
73 |
76 |
|
Q2-2020 |
97 |
113 |
110 |
150 |
145 |
107 |
107 |
137 |
96 |
131 |
148 |
109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change from previous quarter |
+73% |
+57% |
+83% |
+90% |
+101% |
+75% |
+27% |
+71% |
+55% |
+64% |
+103% |
+43% |
Figure 3: Total UK stocks and shares ISA sales
|
Quarter |
New Policy Sales |
New Policy Value |
|
Q1-2019 |
100 |
100 |
|
Q2-2019 |
96 |
96 |
|
Q3-2019 |
101 |
103 |
|
Q4-2019 |
100 |
100 |
|
Q1-2020 |
78 |
69 |
|
Q2-2020 |
109 |
118 |
Methodology (defined by Union Data):
The Scottish Friendly New Investor Index measures the quarterly status of the UK savings and investment market using adult stocks and shares ISA sales data from Scottish Friendly.
The Index was initiated in Q1 2019 and this quarter was scored as 100, providing a benchmark for future editions of the New Investor Index. A score greater than 100 indicates performance higher than in Q1 2019 while a score lower than 100 will indicate contraction in the savings and investment market vs that quarter. Similarly, a lower index than a previous quarter indicates market contraction while a larger index score indicates an increase in the savings and investment market.
This index is designed to be as reflective of the whole of the UK savings and investment market as possible. To ensure that any observed changes in the Index are not directly associated to Scottish Friendly’s specific market performance or marketing strategies our data analytics partner, Union Data, have converted the raw sales data to indices using models to:
- Protect commercial sensitivities within the data
- Remove seasonality inherent within the data, for example, ISA sales tend to peak at the beginning and end of the tax year (April 5th)
- Remove factors specific to Scottish Friendly’s performance within the wider savings and investment market including the size of the customer base and marketing budget
More technical details available on request.
Contacts:
Kevin Brown, PR & Communications Manager, Scottish Friendly
07512194336
Kevin.brown@scottishfriendly.co.uk
Daniel Batey, Managing Director, Union Data
Editors notes:
About Scottish Friendly
Scottish Friendly is a leading UK mutual life and investments organisation. It provides investors and their families with a wide range of investment and protection solutions and provides life and investment products and services to other financial organisations.
Scottish Friendly has roots stretching back to 1862. Established as the City of Glasgow Friendly Society, its name changed in October 1992 when it took over Scottish Friendly Assurance.
In recent years Scottish Friendly has significantly restructured its business. The Group has flourished through a three-part growth strategy of organic growth, mergers and acquisitions, and business process outsourcing.
Scottish Friendly, Scottish Friendly House, 16 Blythswood Square, Glasgow, G2 4HJ
Scottish Friendly Assurance Society Limited. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Scottish Friendly Asset Managers Limited. Authorised and regulated by the Financial Conduct Authority.