Investors turning to JISAs as Government mulls CTF transfers

15 April 2013

Halifax Share Dealing surveys investors to establish what impacts their investment strategies and where they are investing

Junior ISAs (JISAs) are rapidly overhauling Child Trust Funds (CTFs) as the investment vehicle of choice when it comes to saving for children, according to the latest Halifax Share Dealing Market Tracker.

CTFs are still the most common investment among those investing on behalf of children, with almost half (48.3%) of these investors saying they are still actively investing in them.

However, they have been closed to new business from 2011 and investment into JISAs – the product which superseded them – is rapidly catching up. More than a quarter of those investing on behalf of children (27.6%) say they are putting money into a junior cash ISA, and 10.3% are investing in a junior stocks and shares ISA. In addition, 13.8% are investing in a regular stocks and shares ISA in their own name specifically on behalf of children.

Providing a good start
Nearly half of those investing on behalf of children say the primary purpose is as a general savings vehicle (48.7%). However, a third (33.3%) say it is for the child's education (college/university etc), and 12.8% far-sighted investors say it is intended to help the child to purchase their first house.

What products are you using to invest in on behalf of children?
Child trust fund - 48.3 %
Junior ISA - Cash - 27.6 %
Premium bonds - 20.7 %
ISA - Stocks & shares (in own name) - 13.8 %
Junior ISA - Stocks & shares - 10.3 %
Standard cash savings account - 10.3 %

Damian Stansfield, Halifax Share Dealing, comments:
"The CTF scheme remains popular among those who have one, but it is now closed to new entrants so it not a growing market. Among our investors we're seeing that both cash and stocks & shares JISAs are proving to be a successful replacement with new entrants seeking the benefits of tax free savings.

"The current rules prevent children with a CTF from opening a Junior ISA, but the options for transferring savings held in CTFs into JISAs are now being consulted on. It will be interesting to see what happens if these rules change as CTFs still hold some advantages over JISAs.

"Whatever happens here the important thing is that if investors are not currently saving for their children and are able to do so then even modest regular investments could grow in time to provide help with a first car, further education or even a first house."

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