03: ISA investment and account structures

ISAs have two possible investment components:

The stocks and shares component

  • Shares listed on any Recognised Stock Exchange can be held in the stocks and shares component of an ISA.
  • All FSA authorised retail funds (ie virtually any unit trust, OEIC or, UCITS) are eligible for ISA investment, provided they do not have the characteristics of cash deposits, and are not subject to redemption restrictions.
  • Corporate bonds and EEA government securities are also eligible investments, provided there is at least five years to redemption at the date of purchase.
  • The stocks and share component also includes life assurance.
  • Cash can be held in the stocks and shares component, but only for future investment.

The cash component

This may be invested in bank or building society deposits as well as money market unit trusts that hold deposits rather than securities. Two special National Savings ISA products are also available.