Choosing where to invest your ISA allowance is a big decision, particularly in today’s ever-challenging environment. With funds giving you access to exciting investment opportunities from across the globe, why limit yourself to the UK?
Different markets move in different ways so spreading your equity investments across geographical areas helps build a well-diversified portfolio. Our team of full-time fund analysts puts more than 400 fund managers through their paces in face-to-face meetings each year. In this article we look to all corners of the globe to showcase some of their top-rated funds for an ISA portfolio.
The UK - JO Hambro CM UK Opportunities
With this home-grown fund, you'll be investing in such dependable brands as GlaxoSmithKline, maker of everything from Aquafresh toothpaste to Horlicks, and National Grid, which owns the electricity transmission system in England and Wales and much of the gas distribution network across the UK.
John Wood, the fund’s manager, focuses on identifying quality companies that can generate predictable, growing cash flows, and steers clear of companies that rely on turning around their fortunes. JO Hambro CM UK Opportunities features Wood’s strongest ideas so it has a fairly concentrated number of stocks (typically between 30 and 40) but because he takes a cautious approach, it tends to be less volatile than some others in the sector.
North America - GAM Star GAMCO US Equity
This fund is run out of New York and is managed by Mario Gabelli who with more than 40 years’ industry experience, lives and breathes the US stock market. His 40-strong team of analysts looks for undervalued, under-researched companies with strong management and a catalyst that could trigger a rerating.
At any one time Gabelli holds 100 to 150 stocks, which helps diversify risk. He was a long-term holder of Cadbury and was instrumental in its takeover by Kraft. A more recent success of Gabelli’s has been his four million share stake in bourbon company Jim Beam. In January this year, the company was acquired by family-owned Japanese drinks firm Suntory in a £9.7 billion deal. Jim Beam’s share price rose 24% on the announcement.
Europe - Baring Europe Select
This European fund doesn't focus on the big, global brands that pepper the portfolios of so many heavily marketed investment funds. Instead, Baring Europe Select homes in on middle size and smaller companies from across the Continent. Manager Nicholas Williams’ holdings include RyanAir, Danish jewellery company Pandora and Ingencio, which provides technology for secure electronic transactions.
For Williams, the advantage of being a small and mid-cap investor is choice, but this means he has to be very disciplined about picking stocks. While investing in companies of this size does notch up the investment risk compared with investing in larger companies, we view Williams as a safe pair of hands and believe Baring Europe Select is an excellent choice.
Asia - First State Asia Pacific Leaders
This fund gives you access to the expertise of star fund manager Angus Tulloch, who has been managing funds in this sector for more than 25 years. He takes a conservative approach to investing, getting to know company managements thoroughly and only investing in those he trusts to have a solid, long-term business plan so that he can invest and reap the benefits over time.
Tulloch and his team are particularly sensitive to corporate governance issues and actively engage with management on both direct business issues and socially responsible practices. Turnover of stocks in this fund is low and Tulloch tends to stay clear of racier areas such as Chinese banks and state-owned enterprises.
Japan - GLG Japan Core Alpha
Access an impressive collection of iconic Japanese companies such as Nintendo, which unleashed Super Mario on the world, and the photography giant Fujifilm Holdings Corp. Manager Stephen Harker singles out large companies that he believes are trading below their ‘correct’ valuation.
The portfolio is fairly concentrated (approximately 40 companies) and Harker’s bold, sometimes contrarian calls can result in periods of volatility and performance out of line with the market. While this might make for a rollercoaster of a ride, we believe future growth prospects are excellent. GLG also operates a currency-hedged version of this fund to help investors mitigate the impact of currency movements and mirrors GLG Japan Core Alpha’s holdings.
Emerging Markets - Lazard Emerging Markets
We think that over the long term, emerging markets have significant growth potential and Lazard Emerging Markets will give you exposure to countries as diverse as Colombia, Russia and South Korea.
Manager James Donald has been investing in the region for more than 20 years and currently favours financials, giving you a stake in Banco do Brasil and Sberbank. These aren't investment banks, instead provide products such as current and savings accounts to the emerging affluent becoming bank customers for the first time. You'll also be buying into Pacific Rubiales Energy Corp, which focuses on identifying oil and gas opportunities in South and Central America, and the world's largest mobile phone operator, China Mobile.
Global – Aberdeen World Equity
Global funds create a simple way to invest in a collection of high quality companies from around the world and we think Aberdeen World Equity as a particularly good choice for investors seeking mainstream exposure.
It has an unconstrained portfolio made up mainly of large-cap stocks, selected by Aberdeen’s Edinburgh-based global equity team rather than a single fund manager. As a big investment house Aberdeen has the capability to operate well-resourced regional teams around the world and their role is to get under the skin of local companies and establish which ones have sound financials, strong management teams and that are run with transparent structures. The managers in Edinburgh then choose from these companies to create a concentrated global portfolio.
How Bestinvest can help
You can access our award-winning research on any of these funds and purchase them within an ISA by following the links provided. If you would like to see our full range of rated funds by sector, why not download our much-loved Premier Selection guide? Bestinvest won Self Select ISA Provider of the Year at the FT and Investors Chronicle awards 2013. We give you the freedom to choose investments that are right for you and the support you need to reach your objectives.
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