Fidelity Cash Fund ISA

What is a Fidelity Cash Fund ISA?

A Fidelity Cash Fund ISA is a Stocks and Shares ISA that invests in the Fidelity Cash Fund.

Despite it being a cash invested fund, it isn’t the same as a Cash ISA. A Cash ISA is a different type of ISA entirely, and just gives you a fixed or variable rate of interest on your cash balance.

What is a Stocks and Shares ISA?

A Stocks and Share ISA is a tax-free investment account in which you can buy shares, funds and other investments.

ISA accounts are free from the following taxes:

1. Income Tax – this is normally paid on dividends from your investment if it’s not held in an ISA
2. Capital Gains Tax (CGT) – this is normally paid on the growth of your investment’s value when you sell it if it’s not held in an ISA

What is the Fidelity Cash Fund?

The Fidelity Cash Fund is a managed fund (specifically a unit trust) that invests solely in cash and cash equivalent products.

Cash investments are low risk compared to investment funds and shares because they can’t fluctuate greatly in value. Instead, they provide a fixed or variable rate of interest to investors.

The Fidelity Cash Fund pools its investors’ money together to invest in approximately 40 different cash products and holdings at any one time.

What does the Fidelity Cash Fund invest in?

The Fidelity Cash Fund invests in many different money market and cash instruments such as bank deposits and short-dated gilts.

The fund aims to grow in value through the interest it receives from its cash investments, offering three main benefits to investors:

1. A competitive rate of interest
2. A low level of investment risk and high security
3. More liquidity than a fixed rate Cash ISA

As you can trade the cash fund within a Stocks and Shares ISA, it’s an attractive alternative to a fixed rate Cash ISA that usually locks you in for multiple years, during which time you can’t make withdrawals.

With a Fidelity Cash Fund ISA, however, you can withdraw at any time once you have sold your holding in the fund, and you can sell online through your Stocks and Shares ISA provider’s online platform.

How do I Open a Fidelity Cash Fund ISA?

1. First, you need to choose a Stocks and Shares ISA provider that offers the Fidelity Cash fund via their platform (to compare ISA providers, look at charges, investment options, customer service ratings etc.)
2. Then, open your ISA online through your provider’s website.
3. Or, you can do this over the phone or via a postal application if you prefer.
4. You’ll need your National Insurance number and some basic personal information to open your account.
5. And you’ll need your debit card to add money to your ISA once it’s set up.
6. You can then buy Fidelity Cash Fund units with the money in your Stocks and Shares ISA.
7. If the value of the fund increases, your holding will rise in value, and you can sell and withdraw your investment at any time.

Can I transfer an existing ISA into a Fidelity Cash Fund ISA?

Yes, you can transfer an existing Stocks and Shares ISA or Cash ISA to an ISA platform and invest in the Fidelity Cash Fund.

To do this:

1. Complete your new ISA provider’s Stocks and Shares ISA transfer form
2. Return it to your provider
3. They’ll complete your transfer which will take 4-6 weeks
4. When it completes, you can invest your ISA money into the Fidelity Cash Fund.

Remember: check with your existing provider if you’ll be charged for transferring out and weigh up the costs before you transfer.