Investments  

Isa season kicks off value vs growth debate

Isa season kicks off value vs growth debate

Analysts have begun to debate the merits of value stocks versus growth funds ahead of the impeding Isa deadline.

Juliet Schooling Latter, research director of FundCalibre, has told advisers that a combination of growth and value stocks could result in market-beating returns.

“Quality growth funds have been very popular with investors for some years now, particularly as growth of any kind and income at a decent level has been increasingly hard to find,” said Schooling Latter.

“With a good manager behind them, growth funds should continue to do well, no matter what the economic climate, and we think they make good core holdings in a portfolio.”

She recommended three growth funds which are focused on a combination of UK small caps and global opportunities: Baillie Gifford Global Discovery, Marlborough UK Micro Cap Growth, and Rathbone Global Opportunities.

According to Schooler Latter, the Baillie Gifford fund is renowned for the quality of its in-house research and invests in “what the team believe to be the most innovative and fast-growing companies in the world.”

The Marlborough fund is managed by the Hargreave Hale team, and invests in firms with disruptive technologies or leaders in niche markets. 

Meanwhile, Rathbone Global Opportunities seeks simple, scaleable businesses with entrepreneurial and flexible management teams. 

In terms of value picks, Schooler Latter has recommended R&M UK Equity Long Term Recovery, Schroder Recovery and L&G UK Alpha Trust.  

“Longer term, we suggest investors have a balance of both growth and value funds in their portfolios to avoid style bias,” she said.

“Now seems to be as good a time as any to dip a toe back into value waters.”  

The R&M fund aims to find companies which are undervalued despite strong management.

L&G’s UK Alpha Trust fund is run by Richard Penny, who FundCalibre pointed out takes a capitalisation agnostic approach in order to source bargain stocks across the UK. 

Schooler Latter described the Schroder Reviver fund as “a true deep-value fund that invests in the cheapest and most unloved companies in the UK”, but warned that – as with any value stocks - investors should expect volatility.