The funds represent an opportunity to diversify holdings in tough times, according to Barclays.
Stocks and shares Isa holders are increasingly investing in Exchange Traded Funds (ETFs), latest figures from Barclays Stockbrokers show.
According to today's report, 50 percent of investors hold the funds within their Isa wrapper, with trading activities volumes increasing as the year went on.
Evidence that savvy investors were taking advantage of market volatility through ETFs came with the finding that the busiest month of all was October 2008 - when the financial crisis was at its worst and the government unveiled its £37 billion bank bailout.
ETFs are a relatively recent innovation in the investment sector. As their name suggests, unlike traditional mutual funds ETFs are publicly listed and traded - with the majority functioning as so-called "index trackers", rising and falling in value alongside a selected stock exchange.
Barbara-Ann King, head of proposition at Barclays Stockbrokers, commented: "As the end of this tax year looms, it is encouraging to see savvy investors combining simple and transparent investments like ETFs with the tax benefits of investing through their ISA. Barclays Stockbrokers saw a significant increase in ETF trading activity from October to December 2008, with clients utilising them to achieve diversified market exposure at a low cost."
The most popular ETF on the market bought by Barclays Stockbrokers clients was the iShares FTSE 100 index tracker, encompassing 33 percent of overall trades over October to December 2008.
