Invest like the experts this ISA season

The tax year deadline is looming but, for many of us, investing our annual ISA allowance is still sitting on the ‘to-do list’. If you’re a bit stuck for ideas this season, we’ve asked the FundCalibre experts where they’re putting their money.

Darius McDermott, managing director

“With the UK on the verge of triggering Article 50, the US market trading around record highs and the French election ahead, I’m playing it fairly safe this ISA season. An absolute return fund can be an excellent way to add some protection to your portfolio and I’ve gone with Smith & Williamson Enterprise, which aims to deliver equity-like performance but with half the volatility of the UK equity index. I particularly like this fund because it has a history of performing well in rising markets too, which not all absolute return funds do. This makes it a nice option for those who want to ‘hedge their bets’. For my kids’ Junior ISAs, I’m happy to take a bit more risk as they have a long-term time frame and I’ve chosen Goldman Sachs India Equity Portfolio.”

Clive Hale, director

“With today’s inflation figures coming in at 2.3%, bonds and cash are likely to be hard hit this year. I think one of the best things savers can do is to allocate some of their ISA allowance to equity funds that take a bit more risk to deliver long-term growth potential. I’ve chosen Baillie Gifford Global Discovery, whose manager Douglas Brodie has a true focus on finding the most innovative and fast-growing businesses.

“Meanwhile central bankers around the world continue to ‘experiment’ with monetary policy and I’ll certainly be putting some of my money into BlackRock Gold and General as a bit of an ‘insurance policy’ in case they get it wrong!”

Juliet Schooling Latter, research director

“India is my pick for a good growth story this ISA season. The goods and services tax bill that was passed last year is due to be implemented in July and should add meaningfully to government tax revenues over the coming years. Plus prime minister Narendra Modi’s reform mandate has been strengthened by his party’s strong victories in recent state elections.

“In a higher risk market like India, you want to go with an experienced manager who has a strong track record and exceptional local knowledge, and the team behind Ashburton India Equity Opportunities fit the bill. The fund invests in no more than 20 to 30 companies, so you really are getting their best ideas.”

Tony Yousefian, investment trust specialist

“Although there is uncertainty in global markets right now, economic growth has been picking up and I’m actually feeling quite positive. One region I think is set to benefit from a global recovery is Asia. Companies here have been hard hit over the past five years and an element of catch-up is not unreasonable. Schroder Oriental Income Fund has consistently provided excellent returns and the manager’s 30+ years of experience are a huge asset.

“In a low interest rate environment, investment trusts generally can be a good way to invest for income, as their ability to put aside some dividends each year into a revenue reserve means they may be able to pay their shareholders a more consistent income in good and bad years.”

James Yardley, senior research analyst

“Like Darius, I think an allocation to absolute return funds doesn’t hurt right now. I’ve chosen Church House Tenax Absolute Return Strategies, which is a solid multi-asset fund. It is very sensibly put together, which helps protect the fund in down markets but means the portfolio is still positioned to try and make some money in rising markets too. I’m also holding Standard Life Investments Emerging Market Debt in my ISA. I don’t see a lot of good opportunities in the corporate bond space right now, but emerging market bonds offer higher yields to compensate investors for the extra risk they are taking – and in the Standard Life fund, the manager Richard House’s competence and diligence give me confidence he makes his choices wisely in what can be quite tricky markets.”

Ryan Lightfoot-Brown, research analyst

“I’m with Juliet and Darius on India’s prospects – I think that country really is the best growth story of our generation. I’ve gone with Goldman Sachs India Equity Portfolio, because I like its very broad exposure to companies of all sizes. This fund holds around 80 to 90 companies and makes an excellent ‘all-weather’ investment, in my view. I’ve also put some money into UK smaller caps by way of Wood Street Micro Cap, which I think was oversold last year after the Brexit vote. Run by the specialist smaller companies team at Livingbridge, the fund has a track record of finding and investing in some of Britain’s most entrepreneurial businesses in the early stages.”

This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions. Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice. Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.