Woodford benefits as Hargreaves Lansdown savers flee cash

Neil Woodford

Hargreaves Lansdown clients have fled cash and piled into the Woodford Equity Income fund in August, the same month the Bank of England cut interest rates to 0.25 per cent in a blow to savers.

It saw a 50 per cent increase of clients transferring cash ISAs into stock and shares ISAs in August, compared to the same month last year.

The Woodford Equity Income fund was the most popular active fund for cash ISA transfers, followed by HL Multi-Manager Income & Growth trust and Fundsmith Equity.

The Lindsell Train Global Equity fund and HL Multi-Manager Special Situations trust rounded out the top five.

Popular tracker funds for cash ISA transfers included the Fidelity Moneybuilder Income fund and Legal and General’s International index, General US and UK indexes. The Vanguard Lifestrategy 20% equity was also popular.

Danny Cox, chartered financial planner at Hargreaves Lansdown, says: “It’s hardly a surprise we have seen a sharp increase in numbers of cash ISA investors showing an appetite for stocks & shares. A further rate cut of Thursday would be meaningless in the context of borrowing costs and economic stimulus, but would act as another hammer blow for the saver.

“Cash is the bedrock of portfolio planning but the longer term prospects of the stock market are simply far more attractive than below inflation interest rate returns.”

Cash ISA clients also transferred into individual stocks in August, favouring GlaxoSmithKline, British American Tobacco, Legal and General, Lloyds Banking Group and Sirus Minerals plc, which is listed on the AIM market.

According to HMRC, 80 per cent of ISA accounts subscribed to in 2015/16 were in cash, with £58.7bn saved.