Sales of funds in Isas slumped by £1.1bn during the 2015 to 2016 tax year, according to figures from the Investment Association.
Net inflows for Isa funds reached £1.5bn in the 2015 to 2016 financial year, a fall of more than 42 per cent against the previous year’s figure of £2.6bn.
However, data from the trade body - drawn from Cofunds, Fidelity, Hargreaves Lansdown, Old Mutual Wealth and Transact - revealed investors had rushed to put their money in Isas last month to make the most of their allowance before the end of the tax year.
Guy Sears, interim chief executive of the Investment Association, echoed this point, saying retail sales turned positive in March as investors sought to make the most of their pension contribution and Isa allowances.
In March, net Isa sales reached £177m, up from £171m in the same week last year.
| Tax Year | Full Tax Year | Q1 | 1 Mar to 5 April | 1 - 5 April | Jan - 5 April |
| 2015 - 2016 | £1.5bn | -£573m | £237m | £177m | £171m |
| 2014 - 2015 | £2.6bn | £135m | £563m | £171m | £171m |
The top three best-selling sectors for Isas based on the five fund platforms in March were:
1. UK Equity Income (£86m net sales)
2. Asia Pacific Excluding Japan (£49m net sales)
3. Mixed Investment 40-85 per cent Shares (£29m net sales)
Broadly speaking, retail fund sales made a comeback after two consecutive months of net outflows, IA figures also revealed.
This follows a Nationwide survey of 2,000 Isa savers which found the number of people using their full Isa allowance had increased over the last couple of tax years.
In the 2015/16 tax year, 21 per cent of savers used their full Isa allowance, from 18 per cent in the 2014-15 tax year.
katherine.denham@ft.com
