The single most popular investment in the UK as the ISA deadline approaches is a not a fund or a single stock but a gilt, according to Interactive Investor (PA) (PA Wire)
The single most popular investment in the UK as the ISA deadline approaches is a not a fund or a single stock but a gilt, according to Interactive Investor.
UK gilts, or Government bonds, have remained the most popular asset for the 10th consecutive month, even as declining yields mean the returns are not as strong as they may have been in the second half of 2023.
The TN25 gilt, due in January 2025, was the top asset in terms of net flows, while T26 and TG24 were not far behind.
The top gilts beat out all of the most popular funds in the country, whether that’s active funds from stock pickers like Terry Smith or passive funds tracking indices like Wall Street’s S&P 500. They also beat all of the most popular individual shares, from perennial widely held British investments like Lloyds to recently popular picks like Nvidia.
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For much of the post-global financial crisis era, gilts were popular only with those seeking ultra-safe assets, as low interest rates meant returns were minimal. But stronger returns have turned them into a more mainstream investment.
Gilts also offer tax benefits compared to shares, which make them attractive to savers who have maxed out their ISA allowance. The Treasury-backed assets have a principal amount and a coupon – which acts as interest. They are then traded on the open market, with recent increases in interest rates prompting investors to sell them for significantly less than the value of the principal.
The coupon is taxed but differences between the principal and the open-market price are not. This means that gilts issued at a time of low rates are very tax efficient, as most of the gain realised by savers is due to the principal being higher than the market price.
For those who have not yet maxed out their ISA allowance, gilts can still be included in an investment ISA. All types of assets included in an ISA would be subject to the tax relief that applies under the allowance.
The “yield” of a gilt is the effective interest rate when both the coupon and the difference between the principal and market price price are taken into account.
Sam Benstead, fixed income specialist at interactive investor, says: “It may surprise many to see that it is not a popular fund, investment trust, ETF, or share that has been attracting the most cash since last summer. But it makes a lot of sense that TN25, alongside other gilts maturing soon, have seen a huge amount of cash flow into them.
“First, gilt yields hit a recent peak last summer, at around 5%, causing many investors who had steered clear of bonds to pay attention. That kickstarted flows into the asset class.
“Combined with tax benefits due to low coupons, there were and still are good low-risk returns on offer for investors who have maxed out their ISAs and have cash they want to lock away for relatively short periods.”
The deadline for savers to use their tax-free ISA allowance is 5 April.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
