The number of new stocks and shares ISA policies opened in the fourth quarter of 2020 fell by 4% on Q3, according to Scottish Friendly’s latest Investor Index.

Scottish Friendly suggested that investor demand had reached its lowest level since the first quarter of 2020.

The new figures also showed the value of new investments in Q4 was down by 24% on the peak recorded in the second quarter of 2020. The index stated that levels of new investment into stocks and shares have levelled off following a rush of activity in Q2, when official data revealed that the UK household savings ratio had reached an all time high of 29.1%.

Scottish Friendly’s Investor Index tracks adult investment ISA policy sales and the total value of these new policies among Scottish Friendly’s UK-wide customer base, with quarterly activity measured against a base rate of 100.

Since Scottish Friendly started tracking the index data in Q1 2019, the friendly society suggested that older investors have consistently been the most active. However, while new policy sales and new policy value dropped among investors in the higher age brackets – those aged between 35 and 49 as well as those between 50 and 64 – in Q4, demand has increased among younger investors.

The latest index revealed that the number of stocks and shares ISA policies opened by people aged 18 to 34 rose by 4% quarter-on-quarter, while the value of these new investments up by 9% on Q3.

“The past 12 months have been particularly volatile for the index and it shows how investors’ interaction with stocks and shares has swung wildly,” said Scottish Friendly savings specialist, Kevin Brown.

“In 2019, the index was relatively stable with minor fluctuations in new policy sales and value, but as the pandemic struck in Q1 2020 we saw a huge drop off in activity before a big spike in the three months to June. A period of levelling off then followed in the second half of the year and in the run up to Christmas, which traditionally impacts households’ capacity to save.

“Early in 2021, we are seeing another new wave of activity as interest from retail investors spikes once again and we expect this increased demand will continue throughout much of Q1.”

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