ISAsMar 5 2018

Granny to junior: Isa fund picks for your clients

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Granny to junior: Isa fund picks for your clients

Investment experts have picked their favourite funds to invest your clients' hefty £20,000 Isa allowance, for everyone from Millennials to great aunt May. 

For younger people

Tim Cockerill, investment director at Rowan Dartington, recommends Downing Strategic Micro Cap for those just starting out. The fund takes large stakes in small companies.

“Due to the less liquid nature of these companies, Downing Strategic Micro Cap’s performance profile is likely to be quite different when compared with mainstream UK smaller company funds,” he said.

“The reason for investing is that these small businesses have the potential to grow significantly and the manager Judith Mackenzie is very experienced in this space. 

"This is definitely one for the long term, so ideal for patient millennials.”

Dennis Hall, CEO and Chartered Financial Planner at Yellowtail Financial Planning, has two picks for younger investors.

“Investors in their twenties and early thirties have time on their side and if investing for the long term they can afford to take a few knocks along the way to get a better outcome.

"The secret is to buy well and hold.

"I’m torn between investing into a high conviction investment company like Lindsell Train, or into something more diversified like Scottish Mortgage – personally I hold both and maybe that’s the answer.”

As a satellite fund

For those with existing Isa investments, who want something extra to add into the mix, Sam Slator at Fund Calibre suggests Aberdeen Latin American Equity.

“The growth potential of emerging markets over the long term is very exciting but investing in them can be a bumpy ride, so investors need to be able to stomach the extra risk," she said.

"This fund gives investors exposure to companies in Latin America and is managed by Aberdeen’s renowned emerging markets team, whose primary investment concern is quality, followed by value."

For those in their middle years

Jim Harrison, director at Master Adviser, picks a smaller companies fund for middle years investors who probably still have a fairly lengthy investment horizon, and have been around enough to understand market cycles.

"It is hard to see beyond Harry Nimmo’s Standard Life UK Smaller Companies but I’d recommend taking a look at Neil Hermon’s Henderson Smaller Companies; impressive total return, surprising strong dividend for a smaller companies growth fund and available at almost a nine per cent discount."

Silver savers

Neil Mumford, Chartered financial planner at Milestone Wealth Management Limited has an investment trust on his mind for older investors.

"Most retirees require an inflation-proofed income from their investments to supplement their pensions in this era of low interest rates,” he said.

“Therefore, silver surfers should look no further than one of the AIC’s dividend heroes, Scottish American, managed by the investment giant Ballie Gifford.

"Currently providing an income yield of three per cent, more impressively this investment company has continually delivered a rising dividend income, which has increased by 46 per cent over the last ten years, well above inflation.

"Although not for the faint-hearted retiree due to its complete exposure to global equity markets, it will pay those that are willing to stick with it through good and bad market conditions.”

Income seekers scared of rate rises

Sheridan Admans, investment manager at The Share Centre suggested GAM Star Credit Opportunities for investors seeking high income returns and worried about the interest rate environment.

“The manager aims to produce high income returns by investing predominantly in investment grade or high-quality issuers.

"This fund invests in the subordinated corporate bond issues of investment grade business. This style of investing assumes there is a small likelihood of a default on a subordinated high yield issue from a high-quality issuer such as Vodafone, HSBC Holdings or Prudential for example.

"The key attraction of this fund is that it invests in fixed Income issues as well as floating rate notes (FRN) and convertibles, this combination should provide a cushion regardless of rates rising or falling.

"FRN notably provides insurance against an unexpected future rise in interest rates and importantly, Convertibles should also outperform in a rising rate environment.”