Small investors flee market

SALES of stock market Isas plunged to a fresh low in the wake of the 11 September attacks, new figures show. The amount of money flowing into the tax-exempt investment funds fell 25% to £376m between August and September, easily beating an 18% slide the previous month and taking sales to their lowest level since Isas were launched in April 1999.

ISA sales were down 45% from £682m a year earlier. The Association of Unit Trusts and Investment Funds (Autif), which compiled the figures, said the sharp sales decline was expected but stressed that fewer funds are being cashed in, hinting more people believe there is little point in crystallising losses at such low stock market levels.

Clare Arber, head of communciations, said: ?It is reassuring to see that investors have stayed calm and not rushed to cash in their holdings. However, they remain reluctant to entrust their savings to the stock market.

?The volatility and uncertainty, caused by the attacks on the US and subsequent events, continue to deter further investment. How long it will take for consumers to start investing again, we just don‘t know.‘

But small investors were not the only ones getting cold feet – the flow of cash into funds from institutions also plunged from August to September, down 28%.

The figures also revealed small investors are even nervous about safer sectors – sales for UK corporate bond funds fell 10% and there was a 31% collapse in property fund sales. UK All Companies funds, which includes the most widely known growth funds, remained the most popular sector but saw 14% less money rolling in.

Funds focused on North America were one of the few winners, up 18%, hinting that many investors believed the Dow Jones was over-sold in the massive sell-off after the terrorist attacks. Sales of UK gilt funds, considered one of the safest investments bar bank accounts, also rose slightly.