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Five funds to buy for your child’s Junior ISA before the tax year-end

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A Junior ISA is a good example of saving for the long term. With up to 18 years as the time horizon (or even longer if the child chooses to roll it into an adult ISA when they come of age) Junior ISA investors can afford to take more risk with the hope of benefiting from higher returns.

With the April 5 end-of-tax-year deadline looming closer, we take a look at five higher-octane funds you may like to consider for your child, or grandchild’s investment.

  1. GSAM Indian Equity Portfolio

India is a country we’re particularly positive about at the moment. Pro-business prime minister, Narendra Modi, is undertaking a number of reforms aimed at  improving corporate governance, cutting out red tape, and stamping out black market activities. Not only that but the population is young, educated and entrepreneurial.

Holding a country-specific equity fund is always going to be slightly higher-risk but, for a Junior ISA, we think is worth considering. The Indian stock market is actually down about 10% this year, following the global market correction in February, so valuations are more attractive right now. We like GSAM Indian Equity Portfolio, which invests in Indian companies of all shapes and sizes and aims to capture the growth potential of the Indian economy. It is an all-weather India fund with a well-resourced and experienced team, based on the ground in India and Singapore.

  1. Lazard Emerging Markets

If you prefer a more diversified emerging market fund, we like this offering from Lazard. Although they rallied last year, emerging markets are looking better value relative to their developed market peers and the longer-term growth opportunities are still very strong.

Lazard aims to use its 230-strong team of investment analysts to identify the global brands of tomorrow in developing regions. The team take a stock selection-based approach to achieve this, as well as using market volatility, created by macroeconomic concerns, to time trading opportunities.

  1. BlackRock European Dynamic

Europe is another area of the market we’re positive about. For the first time in a very long time, the European economy is looking stronger and, while a lot of investors are worried about political uncertainty in the region, genuinely long-term investors can look beyond these issues and look to invest in the very best of the thousands of companies operating on the continent.

BlackRock European Dynamic is a fund we like. It is headed up by Alister Hibbert, with the support of one of the best European equity teams in London. He adopts a flexible approach to stock selection and invests in small. Medium and large companies across the region.

  1. LF Livingbridge UK Micro Cap

Very small companies tend to be higher-risk than their larger counterparts because they tend to be unproven, younger and cannot be bought or sold as easily. This area of the market is also less-well researched so there are a wealth of opportunities for skilled managers to uncover hidden gems.

Closer to home we like the LF Livingbridge UK Micro Cap fund, which is run by Ken Wotton. He will only buy into companies which are less than £250 million in size and must see potential for a company to double its earnings over five years before he invests.

  1. AXA Framlington Global Technology

Finally, having a genuinely long-term investment horizon means that sector-specific funds could be a good option. Technology stocks could stand your portfolio in good stead in particular, as more and more disruptive businesses capitalise on already-established areas of the market. Technology is also a great way to find common ground with children and encourage their interest: they may like to be making money from their favourite apps or video games, for example. There are risks as we have seen with Facebook issues recently but, over the long term, we think the sector is attractive.

In this space, we like AXA Framlington Global Technology, which is headed up by Jeremy Gleeson. Jeremy adopts an unconstrained approach to building his portfolio, seeking out growth from technology stocks from around the world. Its lack of benchmark constraints means it is free to invest in ‘new technology’ rather than ‘old commodity’ companies.

Darius McDermott, managing director, Chelsea Financial Services and FundCalibre

Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. Darius’s views are his own and do not constitute financial advice.



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