You are here: Home - Investing - Experienced Investor - News -

Not too exciting, not too boring, ISA options for ‘balanced’ investors

0
Written by: Ryan Hughes
23/03/2018
Using ISAs to hold investments is a no brainer for most people. The tax shelter they provide makes portfolios as efficient as possible and the costs these days are very low.

What can be trickier is deciding on where to invest, especially as we have seen volatility creep back into markets.

Time frame can be one of the key determinants of how much risk people want to take. For example, someone using a Lifetime ISA to save for a house purchase in four years’ time might decide to take less risk than someone using an ISA to save for a round the world trip in 12 years’ time or a parent investing into a Junior ISA for their children to access in 18 years.

Traditionally, people looking for lower risk might have considered fixed interest investments, but with the prospect of higher interest rates which are bad for this asset class, selecting a low risk fund is now a little more difficult. One option may be to look at an ‘absolute return’ strategy that looks to make money regardless of market conditions.

The M&G Absolute Return Bond fund seeks to deliver steady positive returns, with a specific focus on managing volatility through adopting a flexible investment approach. In particular, the fund targets a total return of 2.5% above the three-month GBP Libor rate per annum. The fund is co-managed by the experienced Jim Leaviss along with Wolfgang Bauer and benefits from the huge support of the wider fixed income team at M&G.

The fund aims to be highly diversified providing a broad range of global bonds, government bonds and currency and is very focused on risk management to try and avoid capital losses. For those hoping to protect capital or just eke out a slightly better return than cash, this fund could be interesting.

Another option could be a multi asset solution such as Troy Trojan, managed by Sebastian Lyon. This fund looks to deliver growth over the long-term but importantly has a very clear eye on protecting capital. The portfolio has exposure to equities, bonds, cash and gold, making it well diversified and giving investors an instant portfolio. Should volatility increase this year, this fund is well placed to protect investors.

Those looking to take a little more risk could turn to Europe where the economy recovered strongly during 2017 and there is every sign that this is likely to continue into 2018 as corporate earnings continue their good momentum. With this supportive backdrop, the Crux European Special Situations fund could be well placed to benefit.

Managed by the veteran Richard Pease, this fund focuses on companies that have exceptional management and a market-leading position. Pease uses his many years’ experience to identify good management teams and is happy to invest in a high conviction manner away from the benchmark. This approach typically finds more opportunities in medium and smaller companies and while it can be more volatile than its competitors, it is proof that talented bottom up stock pickers can add significant value.

Ryan Hughes is head of active portfolios at AJ Bell

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
2326855-isa-pic
Significant lack of awareness of flexible and portfolio ISA rules

There is a significant lack of awareness among consumers about ISA features, such as the flexible and portfolio ISA rules.

Close