How to hold £7,200 in a 'Cash ISA'

cheerfulcat

lon_don wrote: »

The prospectus on DB X Trackers site says it is "Eligible for ISAs/SIPPs"

http://www.dbxtrackers.co.uk/pdf/EN/factsheet/factsheetLU0356592187_2008_04.pdf

Is it confirmed then that this ETF can be put into a S&S ISA ?

It says " eligible for SIPPs and the cash component of ISAs ", which suggests that it is not possible to hold this in a stocks and shares ISA.

EDIT - sorry, crossed with Nigel's posting...

rl290

Bazn wrote: »

alternatively if u didn't want market exposure in the S&S isa, you could buy shares in Ian Rushbrooke's perma-bear Personal Assets Trust, which is currently 100% cash (as of 12th feb 2008)

I am an enormous fan of PAT and have had substantial sums with them in the past. The primary goal of the trust is to preserve capital - making a return is a secondary concern. Whilst this has mean that they have had poor returns over the short term (e.g. they have underperformed many funds during the bull market of the last few years), over the long term they have done enormously well.

If you look at PAT's return over the past 10 years, for example, they have outperformed the markets substantially as they held a large chunk of their funds in cash during the dot-com crash and the current bear market.

RL290

Bazn

yeah i was tempted by PAT, it does look a great IT, but it just didnt seem to fit my needs. i may reconsider it soon though....

any conclusions about the isa eligibility of this ETF?

GTG

Bazn wrote: »

yeah i was tempted by PAT, it does look a great IT, but it just didnt seem to fit my needs. i may reconsider it soon though....

any conclusions about the isa eligibility of this ETF?

I have n't bought but it comes up on the dealing page in my Selftrade S&S's ISA, because it's there I assume if I clicked on buy it would execute the trade.

That of course does n't mean it's eligible, it could be an error so tread carefully.

jamesd

HMRC resolved the question of whether the db x-trackers - Sterling Money Market ETF can be included in a stocks and shares ISA: No.

But it is eligible for inclusion in cash ISAs. Anyone know of a cash ISA that allows holding of investments like this?

"Qualifying investments – db x-trackers - Sterling Money Market ETF
We have been asked whether this ETF (Exchange Traded Fund) qualifies for cash ISAs or stocks and shares ISAs.

The company has made no guarantee that the investors capital is safe, however, in reality, it is highly unlikely that investors could ever lose money. The factsheet states that 'the ETF performance could be negative if the Sterling Overnight Index Average falls below the level of the All-In fee'. The All-In fee is db x-tracker’s management charge of 0.15 per cent per pa. So an investor would lose money only if the sterling overnight rate were to fall to 0.15 per cent or below (a highly unlikely eventuality).

Our view, therefore, is that investors could be certain (or near certain) of getting back 95 per cent or more of their initial investment. The fund therefore fails the 5 per cent test and is a qualifying investment for cash ISAs, not stocks and shares ISAs."

GTG

jamesd wrote: »

HMRC resolved the question of whether the db x-trackers - Sterling Money Market ETF can be included in a stocks and shares ISA: No.

But it is eligible for inclusion in cash ISAs. Anyone know of a cash ISA that allows holding of investments like this?

"Qualifying investments – db x-trackers - Sterling Money Market ETF
We have been asked whether this ETF (Exchange Traded Fund) qualifies for cash ISAs or stocks and shares ISAs.

The company has made no guarantee that the investors capital is safe, however, in reality, it is highly unlikely that investors could ever lose money. The factsheet states that 'the ETF performance could be negative if the Sterling Overnight Index Average falls below the level of the All-In fee'. The All-In fee is db x-tracker’s management charge of 0.15 per cent per pa. So an investor would lose money only if the sterling overnight rate were to fall to 0.15 per cent or below (a highly unlikely eventuality).

Our view, therefore, is that investors could be certain (or near certain) of getting back 95 per cent or more of their initial investment. The fund therefore fails the 5 per cent test and is a qualifying investment for cash ISAs, not stocks and shares ISAs."

Thanks for updating us on that one, I'd just like to say that it would be eligible for SIPP inclusion if anyone is looking for safe place to park cash.

Another comment I'd like to make is that we are perhaps heading into a severe deflationary period not unlike what Japan experienced after their bust. I think I'm correct in saying they had 0% interest rates for a period of time in an effort to stimulate demand. Being mindful of this and the similarities of the western worlds' present day bust could HMRCs' ruling proved to be incorrect?

jamesd

I don't think that we'll see a Sterling overnight rate lower than -4.85% to demonstrate that investors have lost more than 5%.

GTG

jamesd wrote: »

I don't think that we'll see a Sterling overnight rate lower than -4.85% to demonstrate that investors have lost more than 5%.

Doh..... don't know where my head was when I said that :embarasse.

ozzage

Sorry to bump this but I wonder if anybody has put this ETF in their ISA despite the ruling above.

I think there would be a case for pleading ignorance on this, since the brokers make it available to purchase! If I'd never stumbled across this thread while searching I would have had no idea that technically it shouldn't be allowed.

tradetime

I'm not sure how much sway ignorance carries with the HMRC, surely the solution is just to have a SIPP instead of a S&S ISA. I know it can't be that simple, so what am I missing?