From: "Andy Pandy" 
Newsgroups: uk.finance
Subject: Re: Alternative to ISA Bonds
Date: Thu, 31 May 2007 20:15:19 +0100


"Edwardo"  wrote in message
news:1180601516.133052.259720@o5g2000hsb.googlegroups.com...
> Hi, my wife & I have about £24K each invested the Nationwide High
> Income Fund under an ISA umbrella. The return over the last 12 months
> is 0.5% & it look like the returns in the near future are going to
> equally as poor. As we are no longer working we need a positive
> return. Are there any non equity alternatives under an ISA umbrella or
> should we exit the ISA & put the money in a savings account? TIA

Nearly all UK corporate bond/gilt funds have had similar poor returns, due to capital
loss because of increasing interest rates. You can't keep the ISA wrapper without
moving to another bond/gilt/equity type investment, so if you cash it in and invest
in a saving account you'll pay tax on the interest, assuming your other income uses
up your allowance (currently you'll get a tax credit for interest earned within the
ISA).  You could consider a high income equity type fund, but the capital risk is
much greater.

--
Andy