Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
With just three weeks to go until the 5 April deadline for this year’s ISA subscriptions, we take a look at three funds for different risk appetites, as well as an income and ESG option.
The defensive nature of the Personal Assets trust may appeal to those investors who are cautious about the pace of the global recovery from covid-19 and also fear the return of inflation. Manager Sebastian Lyon takes a naturally cautious approach and has looked to build in some inflation proofing with 12% exposure to gold and a further 35% in index linked bonds. Add in 40% in high quality equities such as Microsoft, Diageo and Unilever that have a history of compounding returns and you end up with a portfolio that we believe has potential. The approach of ‘winning by not losing’ is one that is often forgotten by many investors.
The UK market is at an interesting inflection point. It has lagged global markets for a number of years as the structure of the market, with a large allocation to ‘old economies’ such as oil and a large financials weighting, has hampered returns. But with Brexit finally behind us, there are signs that investors may once again be starting to look at UK equities, particularly if they are worried about the valuations of growth stocks that have had a strong run as a result of the pandemic. Fidelity Special Values could be very well placed to capitalise on this with his focus on solid but out of favour companies.
The closed ended structure of an investment trust is a good way to gain exposure to smaller companies and with assets of around £600m the Standard Life UK Smaller Companies trust is a nice size to be able to look across the market cap spectrum. The approach has a strong preference for growth companies and is very comfortable looking away from the index, which is entirely appropriate in the smaller companies space. With high active share, sensible costs and a strong track record, this trust demonstrates the benefit of genuinely active management.
Japan and income are not always two investment themes that go together but in recent years some Japanese companies have evolved to become highly profitable and consequently have significant amounts of cash on their balance sheets. This is translating into dividends with company management showing more understanding of the importance of dividends to overseas investors. Jupiter Japan Income actively seeks out those high-quality companies that are generating profits and have a willingness to return that to shareholders as dividends. While the yield may seem low compared to the UK at around 2.2%, the growth of this dividend is key and with low levels of debts in Japanese companies, the potential for this to grow in the coming years has potential to be strong.
The team at Liontrust have been investing with a sustainable approach for many years and have a great understanding of the way that companies are adapting to the importance of ESG along with the way that the behaviour of people is also changing. The fund has a strong growth bias with large allocations to technology and healthcare and therefore naturally has a strong allocation to the US. With valuations potentially looking a bit rich in some cases, this is in the adventurous camp but for investors that want exposure to sustainable themes, the Liontrust team is one to consider.
The value of investments can go down as well as up and you may get back less than you originally invested. These articles are for information purposes only and are not a personal recommendation or advice. Target yields are not guaranteed and can fluctuate.