Stand out funds for this year’s ISA allowance


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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.

The 5 April deadline for using this year’s £20,000 ISA allowance is rapidly approaching and with Cash ISA rates remaining low, many investors will be turning to the stock market to try and ensure their savings can outpace rampant inflation. Individuals will be looking for fund options that suit the amount of risk they want to take in their portfolios, so Ryan Hughes, Head of Investment Research at AJ Bell, looks at four funds with different risk profiles and investment objectives.

Cautious investors

Personal Assets Investment Trust

With jittery equity markets and fears over inflation remaining elevated for a considerable period, the defensive positioning of this trust, and in particular its exposure to inflation protecting assets such as gold and inflation linked bonds could sit well for the year ahead. The portfolio is relatively unchanged from a year ago with 11% in gold and 31% in index linked bonds supporting the core exposure to equities such as Microsoft, Visa and Nestle. As a result, the trust works to provide investors with an instantly diversified portfolio and gives emphasis on capital protection.

Balanced investors

First Sentier Global Listed Infrastructure fund

As the world emerges from hibernation following Covid lockdowns and economies look to get back to full throttle, the importance of high-quality infrastructure has been clearly evidenced. Whether it is through energy needs, distribution networks or communication services, infrastructure is a key part of a fully functioning economy. The First Sentier Global Listed Infrastructure fund looks to provide exposure to all of these areas and more in a global portfolio of infrastructure companies. With over 40% invested in energy related companies, it provides exposure to many who are leading on energy transformation while also giving exposure to critical distribution infrastructure such as railroads and toll roads. The fund benefits from the experienced team at First Sentier based in Australia who have been at the forefront of infrastructure investing for many years.

Adventurous investors

Worldwide Healthcare Investment Trust

Given the increased focus on vaccines and treatments to help combat Covid, a healthcare selection might seem like an obvious choice, but Worldwide Healthcare Trust hasn’t had an easy ride of late. An underweight to the big Covid pharma stocks and an overweight to life sciences, biotech and China, means this trust has faced some strong headwinds and underperformed its benchmark by 30% over the past 12 months. However, the bigger picture away from the immediate Covid winners’ story is how the rapid drug development of the last 18 months translates into revolutionary new treatments looking forwards. The trusts managers, healthcare specialists OrbiMed, continue to find opportunities and the issues in China have created further buying opportunities. In addition, the trust has access to private markets and has been looking to invest in the unlisted space with c7% of the trust now here. With the long-term drivers behind healthcare well established and further investment set to continue making for an exciting future ahead for drug development.

Income seekers

Jupiter Asian Income fund

For many investors who want income, the UK is the obvious place given its traditionally higher yield, but away from the UK, other regions also have strong dividend cultures. In Asia, dividends have long played a key role in shareholder returns and the Jupiter Asian Income fund looks to capitalise on this this. Manager Jason Pidcock is a cautious investor, seeking out companies that have strong management and governance and a clear focus on the shareholder to ensure dividends are a key part of the company strategy. The fund is significantly underweight China, preferring the more predictable governments of Australia, Taiwan and Singapore among others. Asian companies continue to be relatively well managed with low debts, helping support the dividend which currently sits at over 3% from a concentrated portfolio that includes the likes of Samsung, Taiwan Semiconductors, Macquarie and BHP Billiton.

These articles are for information purposes only and are not a personal recommendation or advice. How you're taxed will depend on your circumstances, and tax rules can change. ISA rules apply. Remember that the value of investments can change, and you could lose money as well as make it. Past performance is not a guide to future performance.

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Written by:
Ryan Hughes

Ryan Hughes is Head of Investment Research at AJ Bell. Ryan started his career in 1999 working for an independent financial adviser, progressing to become Head of Portfolio Management at an award-winning advisory firm. Ryan then joined a global asset management firm as a Fund Manager, where he oversaw more than £10bn of multi-asset portfolios and also sat on the investment and global asset allocation committees. After seven years, Ryan joined a small multi-asset boutique managing portfolios for clients all around the world, before joining AJ Bell three years later to help establish our investment capability. As Head of Investment Research, Ryan now oversees all actively managed investment solutions and fund research.