Scottish Friendly Index: stocks & shares ISAs up 71%

Scottish Friendly’s inaugural New Investor Index has revealed that investment in stocks and shares ISAs surged 71% in the second quarter of 2020.

The index tracks sales of adult investment ISAs and the total value of new policies among Scottish Friendly’s customer base, with quarterly activity measured against a base rate of 100.

The outbreak of Covid-19 and the start of lockdown in March coincided with a quarterly 22% drop in new policy sales between Q4 2019 and Q1 2020.

There was also a 31% reduction in the value of investments among new customers between the two quarters.

In the second quarter, however, investors came rushing back as new policy sales increased by 40% while the total investment among new customers soared well above 2019 levels.

The quarterly index reading of 118 for the overall value of new policies represents an 18% increase year-on-year.

The recovery seen in the second quarter of 2020 was apparent among all age groups, but it was greatest among investors aged 50 to 64, where there was an 84% spike in the value of new investment. 

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.

“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 Brits’ capacity to save, as official data shows, which has resulted in a rush of new investors to stocks and shares ISAs.

“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.”