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Revealed: Stand out funds for this year’s ISA allowance

by LLB Reporter
21st Feb 22 9:56 am

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 should 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 high quality equities such as Microsoft, Visa and Nestle. As a result, the trust works well in providing investors with an instantly diversified portfolio and given the emphasis on capital protection should sit comfortably with cautious investors.”

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 very attractive 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, this broad, diversified play on healthcare looks attractive after a period of significant underperformance.”

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 high quality 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.”

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