In Focus: Tax Year End  

Advisers' top investment trust picks for Isas

Advisers' top investment trust picks for Isas
Advisers have named their top trusts based on the life stage of the client (Image credit: Pixabay)

Advisers have named the investment companies they would pick to include in their clients' Isas.

Isas are a go-to product for a lot of advisers as they seek to top up their clients' tax free allowances ahead of the tax year end.

Investment companies can be a suitable option but there are about 300 for advisers to choose from, according to the Association of Investment Companies. And some are more suitable for younger investors than for those already in retirement.

So which ones to choose? The AIC asked four advisers about their preferred options for each stage in an investor’s life.

Paul Chilver, associate and financial planning manager at Birkett Long

For millennials, typically considered those born between 1981 and 1996, Chilver recommended the trusts he was considering or invested in himself.

Paul Chilver, associate and financial planning manager at Birkett Long

He named the Montanaro European Smaller Companies Investment Trust, which, he said, had an "excellent long-term track record against its sector".

He also recommended the Mobius Investment Trust. "It sits in the Global Emerging Markets sector and is one I personally like, as it’s well diversified over many different emerging market regions."

For middle-aged investors he pointed to the Mercantile Investment Trust managed by JPMorgan. "This is a UK all companies investment trust which currently looks to be at an attractive discount at about 10 per cent."

He also picked the Scottish American Investment Company, or Saints, for those starting to think about retirement income, because of its regular dividend payment. 

"This trust has a global approach and is one I personally like as it is underweight North America and this could blend well with other global investment trusts investors may hold."

When it came to retirees Chilver highlighted Temple Bar, which, under a new management, recently returned to outperformance following a rocky few years. Temple Bar is now managed by RWC (Redwheel).

He also suggested the Shires Income trust, which invests in a mixture of UK equities and fixed income. "This diversified approach has helped to keep volatility down and the trust is currently paying over 5 per cent per annum as an income which is very attractive.”

Genevra Banszky von Ambroz, partner at Tilney Smith & Williamson

Banszky von Ambroz cautioned that not all millennials were the same.

Genevra Banszky von Ambroz, partner at Tilney Smith & Williamson

"Many will have mortgages and dependents now, and this may result in a higher degree of risk aversion relative to those who are just entering the workforce, relatively unencumbered in terms of their financial responsibilities," she said.

For those who have the risk tolerance and the timeframe, Banszky von Ambroz recommended the Ashoka India Equity, a mid and small cap Indian equity trust, and VH Global Sustainable Energy Opportunities, which focuses on sustainable energy infrastructure investments which support the UN sustainable development goals.

"The contrarian in me also thinks that Edinburgh Worldwide, which has had a horrible time of it recently, could be interesting on a long-term view," she added.

For Generation X, which typically have a lower tolerance for risk than millennials and will be thinking more carefully about saving for retirement, Banszky von Ambroz pointed to the Diverse Income Trust, Finsbury Growth & Income Trust and Schroder Oriental Income, all of which she believes will generate good long-term returns while delivering an income.