IFISA special report
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MITIGATING RISK
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ISSUE 55 | APRIL 2021
IFISAs maintain their value despite economic uncertainty
e Averag t e g r ta s as of return 021 2 h Marc
8.72 nt per ce s 32 (acros s) nt u o c c a
Average return
INNOVATIVE Finance ISAs (IFISAs) have maintained average returns above eight per cent per annum for the past four years, despite recent economic volatility, exclusive Peer2Peer Finance News research has found. For the 2020/21 tax year, the average target return being offered across 32 IFISA accounts was 8.72 per cent. Due to a lack of historical platform data, just 18 accounts were available for like-for-like analysis across the 12 months of 2020. With this in mind, the average actual return for IFISAs in 2020 was 9.4 per cent. In 2019, the average actual return across 17 IFISA accounts was 8.45
per cent. And in 2018, the average actual return across 16 IFISA accounts was 8.3 per cent. The IFISA was launched in 2016, but delays in regulatory approvals meant that most peer-to-peer lending platforms were unable to offer their own IFISA products until 2017 or 2018. These figures suggest that IFISA investments
have held their value across the past four years, even amid a period of extreme economic uncertainty. Peer2Peer Finance News has counted 38 IFISA accounts which are open to retail investors for the 2020/21 tax year. However, some of these IFISA providers only offer the tax wrapper on individual bond products, which
2020 9.4 per cent (across 18 accounts)
(calendar year)
2019 8.45 per cent (across 17 accounts)
(calendar year)
2018 8.3 per cent (across 16 accounts)
(calendar year)
Source: Peer2Peer Finance News
are subject to availability. This meant that target returns were not available for all IFISA accounts. Among the 32 IFISA accounts which shared target returns with their investors in 2020/21, eight were targeting double-digit returns, up to a maximum value of 16 per cent per year. The lowest target return recorded for the financial year was three per cent. Last month, Peer2Peer Finance News revealed that just 40 per cent of IFISA providers were open to retail investment for the 2020/21 tax year, with big-name providers such as Zopa, Funding Circle and RateSetter missing from the IFISA listings for the first time. Zopa paused new IFISA account openings due to lower demand for personal loans and Funding Circle temporarily paused retail lending while participating in statebacked loan schemes. Meanwhile, RateSetter was acquired by Metro Bank in September >> 4