ISA 2020: ‘Around the world in eight ISA ideas’
“How do I go about finding the right fund for me?”
It’s an often-asked question by investors as they scour the 3,000+ universe of funds available, to decide where to invest their ISA allowance ahead of the deadline on 5 April 2020.
It’s even more challenging when stock markets are tumbling as they have been in recent days.
However, uncertainty also brings opportunities, with the share price of many companies now at more attractive levels.
So, while our own travel plans are now more restricted, with many flights cancelled, we thought we’d look at a few investment ideas around the globe that investors can get onboard with, at a speed that would make Phileas Fogg proud.
Driven by the FTSE 100, there’s no place like home when it comes to funds that deliver a strong income to investors. A good option here is the Royal London UK Equity Income fund, managed by Martin Cholwill, which invests in a high conviction portfolio of around 50 stocks and has an historic yield of 4.5%.
While the UK may now have officially left Europe, there are still plenty of investment opportunities within our reach. John Bennett, manager of Janus Henderson European Select Opportunities fund, targets companies that have been badly managed (but are not necessarily bad businesses) but are likely to prosper over the long-term.
The US, as the largest market in the world, is simply too big to ignore. One fund to consider is LF Miton US Opportunities, a 35-45 stock portfolio, which typically consists of a greater proportion of medium-sized companies and smaller large companies, than its peers.
Those thinking of investing in Japan may want to consider the T. Rowe Price Japanese Equity fund, managed by Archibald Ciganer, which invests in 60-100 stocks. For the long-term investor, this fund offers diversified Japanese exposure, with a manager who has the skill and flexibility to react to evolving market trends over time.
Those looking for a higher risk strategy may want to consider the likes of the ASI Latin American Equity fund. Research is key for this fund, with four to five company visits usually taking place before an investment is made and the focus is on quality companies to help manage volatility.
The long-term argument for emerging markets is clear. Towards the end of 2019 they accounted for 74% of global growth (GDP) as their stock markets continue to liberalise and grow. The Hermes Global Emerging Markets SMID Equity fund is an option here. Its managers focus on small and mid-cap emerging markets companies to build their 75-100 stock portfolio.
Going global for income…
Going global for diversification is a sensible choice, particularly in the income space where there are some 2,500 stocks to choose from. An option here is the BNY Mellon Global Income fund, a value-biased global strategy managed by Nick Clay. It’s designed to generate a yield at least 25% greater than that of the global stock market.
A recent addition to our Elite Rated funds is the Investec Global Environmental fund, managed by Deirdre Cooper and Graeme Baker. It has a unique approach of only investing in companies that are contributing to the decarbonisation of the world economy. The portfolio has complete conviction, with just 20-40 holdings.
Darius McDermott is managing director of Chelsea Financial Services and FundCalibre