With the end of the tax year fast approaching, many investment companies have launched special Isa offers to encourage investors to make the most of their tax-free allowance.
The offers apply to some 50 individual investment companies, with some available for only a limited period, while others are available on an ongoing basis.
JPMorgan, for example, is offering investors a zero per cent initial charge on more than 20 of its investment trusts when purchased on its wealth management service, JPMorgan WealthManager+, until April 30.
Alliance Trust is also offering a zero per cent initial charge, but with no deadline, as is the case at Invesco Perpetual.
Investors putting at least £100 per month into Baillie Gifford’s investment companies will be rewarded with no initial charge and no dealing commission. Any new Isa investment between March 1 and April 30 will also receive a £10 Amazon voucher.
Annabel Brodie-Smith, communications director at the AIC, says: “There’s no doubt that charges can eat into returns, and this can feel particularly pronounced when markets are volatile. So it’s important that even if investors take advantage of Isa offers they know exactly what Isa charges they are paying and which are excluded.
“Investment companies cover a variety of sectors and risk profiles. With independent boards of directors, a closed-end structure to help managers take a long-term view of the market, and the freedom to gear to enhance returns, they can be an ideal way to tap into the long-term potential of the stockmarket.”
With low interest rates and inflation an ongoing concern for investors, financial advisers are once again turning to the income potential of investment companies and the long-term growth story of Asia and emerging markets for their Isa recommendations.
For the second year running, advisers have singled out Templeton Emerging Markets as an adventurous pick, while Asian smaller companies and private equity are also tipped through Aberdeen Asian Smaller Companies and HgCapital.
An income theme dominated the more cautious recommendations, with experts tipping John Laing Infrastructure, Schroder Income Growth and Edinburgh investment trust, while Personal Assets figured as a more defensive choice.
Neil McCarthy, investment analyst at Heron House Financial Management, says: “Personal Assets has an excellent track record of navigating its shareholders through difficult times. Its primary focus is to preserve capital and then achieve growth.
“The trust remains defensively positioned with a continued focus on global blue chips, index linked bonds and gold. Its success has not gone unnoticed and at times the shares do trade at a premium although a mechanism is in place to control the premium level. In fact, the company aims to trade close to NAV and has a zero discount policy.”
Meanwhile, Tim Cockerill, head of collectives research at Rowan Dartington, recommends Schroder Income Growth.
“The objective of this fund is to generate real income growth and with this capital appreciation. It invests in the UK and looks for companies where valuations are attractive given the manager’s view of their future potential.
“Although the trust may appear to be rather conservative, it is concentrated, presently holding around 39 stocks. This means each stock held within the trust is significant.
“The largest holding is currently Vodafone at 8.9 per cent. With a yield of 5 per cent and a good long-term capital growth track record the trust is suitable for those investors wanting a balanced long-term investment.”
Isas are an ideal way to maximise your stocks and shares allowance. Investment companies have an enviable track record when it comes to consistent and growing income and with some interesting launches in recent years with an income theme, for example in the infrastructure sector, there is a wide range of choice for investors.
For the more adventurous investor, Dennis Hall, chartered financial planner at Yellowtail Financial Planning recommends HgCapital.
“The trust provides investors with exposure to a diversified portfolio of private equity investments, primarily in the UK and continental Europe.
“It trades at a discount of 12.8 per cent which is surprisingly small given that most other private equity funds have discounts of between 30-50 per cent to NAV. It is a relatively concentrated portfolio of underlying investments, with the top 20 holdings accounting for 90 per cent of the portfolio value.”
Gavin Haynes, managing director at Whitechurch Securities, says the Templeton Emerging Markets investment trust, managed by Mark Mobius, is also well placed to capture the exciting growth potential of these markets.
“This trust is managed by the highly regarded Mark Mobius, who has been managing the trust since 1989,” he says.
“Mr Mobius has more than 30 years’ experience investing in emerging markets. His style is very much value-driven and portfolio construction may lead to deviations from the benchmark markedly at times. Mr Mobius holds a diverse portfolio of 100-120 stocks. This is a good core holding for broad emerging market exposure.”
Jenny Lowe is features editor at Investment Adviser
