Sunday, March 16, 2014

Tax Management at Bp Holdings: Tax year end thoughts

With stock markets getting off to a shaky start in January following impressive equity returns last year, will investors approach the 2013/14 ISA season with greater caution?

Or will they opt instead for trying emerging markets or a possible fixed income turnaround?

Despite a confident outlook for markets and investors’ growing risk appetite in 2013, net retail ISA sales for the previous tax year actually fell to £1.1 billion compared to £2.3 billion in tax year 2011/12, according to Investment Management Association figures.

The outlook for 2014, by contrast, appears less optimistic as recent volatility in emerging markets coupled with the removal of quantitative easing (QE) and softer economic data in the USA has seen equities start the year on a less firm footing.

The MSCI World Index has so far returned -1.4 per cent in 2014 compared to 15.49 per cent for the same period last year and the current backdrop is seeing some advisers adopt a more cautious approach to this ISA season.

Bestinvest managing director Jason Hollands said: “This season is very different to last year when we had a very clear and quite bullish view on equities.

“You saw fantastic returns on developed equity markets, supercharged with the tailwinds from QE.”

Other advisers are adopting a more optimistic view, looking beyond any short-term volatility to argue that equities can continue to deliver over the long-term.

Investors could risk missing out on another good year for equities by not participating in the current ISA season, according to Skerritts Financial Advisers’ head of investment Andrew Merricks.

But whatever your view, utilising your tax efficient allowances can be crucial in the search for decent returns.

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