Six key reasons to back BRISA as proposal signals dual boost for savings and aims to help revive UK capital markets

  • Higher inflows into UK listed assets
  • Clear government support for British companies
  • A boost to UK equity weightings
  • Encouraging UK retail ownership of UK businesses
  • Improved liquidity
  • Benefits to the taxpayer


The UK Value Opportunities investment team at Polar Capital, the specialist active asset management group, is backing the British ISA (BRISA) which has been proposed by the UK government against the backdrop of a troubled listed UK equity market.

The health of the UK listed equity market is of huge importance to the UK economy and its people, as it makes up well over 10% of the government’s entire tax receipts and employs three million people across the UK.

Georgina Hamilton, Fund Manager of the Polar Capital UK Value Opportunities Fund, said:“It has been a difficult period for thelisted UK equity market, and it is against this backdrop that the Government is using a tax break to encourage more people to invest in the UK stock market. It has a dual policy goal of improving the health of the UK listed equity market and encouraging saving.

“While tax incentives to take part in one’s own listed equity market are not unusual and currently exist in a number of geographies, the proposal has drawn opposition within the UK. We find these arguments unconvincing and unnecessarily cynical and believe these BRISA plans should be embraced.”

There are six key reasons why the team are backing this proposal:

1. Higher inflows into UK listed assets

Persistent UK stock market outflows are the primary reason why UK shares trade on a  valuation discount to those overseas. Investors have pulled £50bn from UK listed equity funds since 2015. The BRISA will help drive capital into UK companies.

2. Clear government support for British companies

This sends an important message that the government is ready to back British companies. It is part of a broader package to address the health of UK listed markets, including encouraging more domestic investment by pension funds and reforming regulation associated with listing in the UK.

3. A boost to UK equity weightings

Many wealth managers have been reducing their UK equity weightings. Were the £5,000 British ISA to be blended with the £20,000 existing ISA monies invested 100% overseas, the UK weighting would be 20%, significantly above where it is today. The PIMFA* benchmark for a conservative portfolio has UK equity allocation at just 10%.

4. Encouraging UK retail ownership of UK businesses

The BRISA would draw attention to the current state of UK domestic share ownership. Foreign ownership consistently accounts for between half to two-thirds of UK shares, with UK investors owning less of their home market than any other developed nation. The NatWest share sale later this year will put a further spotlight on domestic share ownership.

5. Improved liquidity

UK markets have seen a steady decline in liquidity which policies such as these should help address.

6. Benefits to the UK taxpayer

The Government is using a tax incentive to drive investment into UK listed companies rather than see that benefit lost to companies overseas. The health of the UK equity market could benefit and with it government tax receipts, UK employment and growth. More investment in UK listed equities is a positive step towards addressing the persistent UK equity valuation discount. Closing this discount should help turn around the trend of fewer companies listing in the UK and reduce the elevated cost of capital which is hampering the growth of existing listed companies both in terms of their ability to raise capital for acquisitions but also execute their growth strategies more broadly. It is a positive intervention that should be supported broadly across the UK economy.

George Godber was one of the architects of the original BRISA project.

George Godber, Fund Manager of the Polar Capital UK Value Opportunities Fund said: “We believe the British ISA is the first, much needed positive step towards helping the UK listed market whose vast contribution to the UK economy and UK taxpayer is so important. UK listed equities are vital to the economic growth of the UK, employment and government tax receipts”.


For further information, please contact:

Camarco

Sean Palmer: 020 989 5713 / 07591 760 844 / sean.palmer@camarco.co.uk

Annabel Reed: 020 3757 4980 / 07969 273049 /annabel.reed@camarco.co.uk

About Polar Capital

Polar Capital is a specialist, investment-led, active fund manager.  With a collegiate and meritocratic culture where capacity of investment strategies is managed to enhance and protect performance. Since its foundation in 2001, it has grown steadily and currently has 13 autonomous investment teams managing specialist, active and capacity constrained portfolios, with combined AUM of £19.6bn (as at 29 December 2023).

Polar Capital is principally located in London and also maintains offices in France, Spain, Germany, Switzerland, Sweden, the US, China and Singapore.

Polar Capital LLP is authorised and regulated by the UK Financial Conduct Authority and registered as an investment adviser with the US Securities and Exchange Commission.


*Personal Investment Management & Financial Advice.