ISA research

Sharepages ISA research is brought to you in cooperation with Morningstar.co.uk and provides comprehensive analysis, allowing you to track and compare individual ISA funds, along with a personal portfolio tool to follow your investments.

The Morningstar.co.uk features are:

What are ISAs?

ISAs are a form of tax-efficient shelter or 'wrapper' in which you can save and invest without paying income or capital gains taxes on the proceeds. They came into being on 6th April 1999 replacing Personal Equity Plans (PEPs) and Tessa's.

Who can invest in an ISA?

Any person normally resident in the United Kingdom for tax purposes and who is 18 years old or over can take out an ISA.

Why is there so much fuss about them at the moment?

You have an allowance of up to £7,000 per annum, which you can put into an ISA. The year however is based on the tax year and therefore runs from 6th April. If you wish to use your ISA allowance this year you have until 5th April to open an account and invest your money. If you miss the deadline you have no way of using up unused allowances from previous years.

How do they work?

You have several options as to how you invest your annual £7,000 ISA allowance. The first is whether you opt for a Maxi ISA thereby allowing you to put your full £7,000 allowance in Stocks & Shares, or in Mini ISAs which segregate your investment into its component parts (Cash, Life Insurance and Stocks & Shares) with different companies.

Investing in an ISA

The two most popular types of ISAs are Cash Mini ISAs and Mini/Maxi Stock & Shares ISAs.

Cash Mini ISAs

These are similar to a bank or building society account, and are taken out in just the same way. An application form can be requested from the relevant ISA provider

Mini/Maxi Stocks & Shares ISAs

Of these, there are Managed ISAs and Self-select ISAs.

Managed ISAs

These ISAs enable you to invest your money in collectively managed funds (Unit Trusts, Investment Trusts & OEICs). The advantage of this is that you do not need to be actively involved in any of the day to day investment decision making and can leave this to the experts. You usually also have the facility to switch your investment between the funds offered by the ISA manager at minimal cost.

There are two routes by which you can invest in fund managed ISAs:

• Direct with a Fund Manager - Traditionally you have taken out an ISA run by one fund manager. This limits you to only investing in the funds that fund manager runs
  
  
• Multi-Fund ISA/ISA Wrapper - Several companies are now offering the facility to invest in the funds of several different fund managers within one ISA. This gives you much greater choice and enables you for instance to pick the best funds offered by several different fund managers often at no additional cost.

In both these cases you can either go direct to the relevant fund manager or company, or go through an Independent Financial Adviser (IFA). As well as offering an independent view of the market and the funds on offer, in many cases IFAs have negotiated discounts with fund managers saving you up to 5% on initial costs.

Self-Select ISAs

These ISAs are usually run through a Stockbroker, and enable you to make your own selection of stocks and shares to be held within your ISA. While broadening your choice and giving you the ability to make your own decisions, it places much greater onus on you to be actively involved in its running.

For further information or advice on ISAs or in investing in them, call Inter-Alliance on 0870 9000 664. Inter-Alliance is regulated by the Personal Investment Authority.