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WELLESLEY CVA PROCESS NEARS END
Final dividend payment made
OVERARCHING PRINCIPLES
IFISA special report Supported by
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ArchOver’s Charlotte March on longevity and retail
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ISSUE 66 | MARCH 2022
Viva la IFISA! Returns outperform FTSE over four years
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NNOVATIVE Finance ISAs (IFISAs) have outperformed the UK stock market over the four years from 2018 to 2021, exclusive Peer2Peer Finance News research has shown. The tax wrapper around peer-to-peer investments has not only outperformed the FTSE All-Share Index but has also demonstrated far more stable returns in recent years, of approximately eight to nine per cent per annum. Peer2Peer Finance News analysis found that IFISAs returned an average of 7.8 per cent across the calendar year 2021, compared to nine per cent in both 2020 and 2019, and 8.73 per cent in 2018, demonstrating the stability of the asset class over a medium-term investment horizon. By contrast, the FTSE All-Share returned 18.3 per cent in 2021, -9.8 per cent in 2020, 19.2 per cent in 2019 and -9.5 per cent in 2018. This means that £20,000 invested in a FTSE AllShare tracker fund in January 2018 would have been worth £23,022.16 by
£20,000 INVESTED IN AN IFISA VS FTSE ALL-SHARE (JANUARY 2018 TO FEBRUARY 2022) £30,000 £25,000 £20,000 £15,000 £10,000 £5,000 0
n IFISA
n FTSE All-Share
(Source: Peer2Peer Finance News)
(Source: FTSE Russell)
February 2022. If that same £20,000 had been invested in an IFISA it would have been worth £27,851.66 by February of this year. "The performance of the IFISA is perhaps the best kept secret in financial services,” said Bruce Davis, director of industry trade body the UK Crowdfunding Association. “For investors who have an appetite for risk, and are making investments for longer term financial needs, the wide range of products now available in both the P2P and crowdfunding sectors means that it is possible to make investments which are uncorrelated with mainstream public markets. “We need to make sure
there is a more balanced and accurate set of messages out there in the market about the potential rewards and risk of our sector so that ordinary investors don't lose out on an investment option that has shown it can perform well over the long term – even through a crisis such as the pandemic.” The attractiveness of IFISA returns has been further highlighted by the low yields seen on cash ISAs. The best rate on a three-year fixed cash ISA is currently 1.46 per cent, according to Moneyfacts, as of 17 February. UK inflation hit 5.5 per cent in January, meaning that money held in cash ISAs is eroding in value in real terms.
Furthermore, the vast majority of IFISA providers have been able to maintain a track record of zero losses to investors, while continuing to offer inflation-beating returns despite an unprecedented period of economic instability. However, it should be noted that historic data is not a guarantee of future performance, as investments are never risk-free. There is a variety of options on the market for investors considering putting money into an IFISA this tax year. As of February 2022, there were 39 IFISA accounts open to retail investors. By the end of February 2022, these 39 IFISAs were >> 4