You are here: Home - Investing -

ISA tips: experts reveal their top fund picks

Written by:
Three investment experts reveal the funds they think look promising this year for low, medium and high risk ISA investors.

With just over five weeks to go until ISA deadline day, you could be starting to feel slightly overwhelmed by the sheer amount of information out there.

To help ease the load, we asked three top financial experts for their advice on the ISA funds which look promising this year – whether you’re a low risk, high risk or adventurous investor.

Low risk investors


Mike Deverell, investment manager at Equilibrium Asset Management [MD]:

Typically, low risk investors opt for bonds or gilt funds. However, with inflation persistently higher than the Bank of England target, and bonds looking very expensive relative to history, there is a chance of losses in this asset class.

A good alternative to low risk savers would be the M&G UK Inflation Linked Corporate Bond fund. It can benefit from rising inflation yet is less sensitive to interest rates than many other funds. We also prefer this option to a traditional index linked gilt fund which we think could actually produce below inflation returns.

Darius McDermott, managing director of Chelsea Financial Services [DM]:

I recommend Artemis Strategic Assets. Equities remain the mainstay of the fund but the manager can also invest in fixed interest, commodities and currencies and he has a clear investment objective: to perform well when markets are rising and to preserve capital when markets are falling.

He can short stocks as well as taking long-term positions in companies he favours. This fund benefits from being able to invest in other assets when equities are not performing well.

Patrick Connolly, a certified financial planner for AWD Chase de Vere [PC]:

Cazenove Multi Manager Diversity is an ideal choice for a novice or low risk investor, essentially being a whole portfolio in one fund. It invests 1/3 in equities, 1/3 in cash and fixed interest and 1/3 in alternative investments, and so should be well positioned to give long term growth while guiding investors through difficult times.

M&G Episode Balanced looks for behavioural ‘episodes’ where positive or negative creates opportunities. It typically holds 40% in equities with the remainder in fixed interest and property and keeps charges down by predominantly using M&G’ funds

Medium risk investors


MD: As a medium risk investor, you should have some equity exposure as part of a balanced mix of assets. Equity income funds are typically less volatile than growth funds and can produce decent total returns, regardless of whether income or growth is required.

We like the Vanguard FTSE UK Equity Income Index fund. It offers a ‘passive’ approach to income investing, where stocks are selected using a rigid criteria of average dividends which are predicted to be sustained. The fund is very cheap at just 0.25% per annum and its performance has been impressive since its launch in 2009.

DM: Rathbone’s Global Opportunities fund is run by James Thomson and is an out and out growth fund which will also invest in a number of mid and smaller companies. This fund has a consistent track record and has improved its performance in more difficult markets. A good choice for investors looking for a core global growth fund.

PC: AXA Framlington UK Select Opportunities is managed by one of the premier UK managers who is looking to invest in large and medium sized companies which are poised to benefit from tomorrow’s trends. His stocks currently earn a large proportion of their income overseas.

Henderson European Growth is another option. Many European stocks look cheap and this fund can benefit by investing in resilient mid cap companies in niche industries with strong pricing power, consistent earnings and high barriers to entry.

High risk investors


MD: China is the market to invest in if you want to take an adventurous approach to your ISAs this year. The Chinese market is trading on a very low multiple of earnings compared to its own history and to other markets. Its economy is also recovering from its mini slump and with global trade picking up it is poised to have a very positive year.

As the only actively managed fund we would consider is closed to new investors, we like an exchange traded fund – the DBX MSCI China ETF. This tracks the broad MSCI China index closely and at relatively low cost.

DM: I like M&G Global Emerging Markets. The manager is a value investor and contrary to what may people may think, value styles rather than growth tend to outperform in emerging markets. He has a consistent track record and does well in both rising and falling markets. He has 17 years experience and is backed by a well-resourced team.

PC: Old Mutual UK Select Smaller Companies benefits from a proven investment team which adopts quite an aggressive approach. The manager looks particularly for companies which are benefiting from structural growth and those with exposure to the emerging markets

JPM Natural Resources invests primarily in gold and other mining shares and has a torrid couple of years. This is largely because many investors have shunned the perceived high risks of these stocks, which has left many now at attractive valuations and potentially poised to perform well if sentiment improves.

Tag Box

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.

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

How to help others and donate to food banks this winter

This winter is expected to be the most challenging yet for the food bank network as soaring costs push more pe...

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.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week