With no capital gains or further income tax to pay on assets held within a Stocks & Shares ISA, there is nothing holding the performance of your portfolio back other than the investments within it.
Our team of full-time fund analysts puts more than 400 fund managers through their paces in face-to-face meetings each year to find our top-rated funds. We examine the full record of each manager in their relevant sector and take a number of factors into account, including career history, relative performance, cumulative performance and risk controls. In addition, we carry out statistical analysis to check that this performance is the result of skill rather than chance.
Here we highlight five of our top ISA investment ideas:
Fidelity MoneyBuilder Dividend
A favourite equity income fund of ours that gives you access to a portfolio of familiar blue-chip companies. It is managed by Michael Clark who aims to harness the compounding effect of the stock market by investing for the long term in companies that produce sustainable and growing dividends, even during difficult economic times. While the fund focuses on the UK market, up to 20% of its net asset value may be invested in non-UK listed equities. It targets a dividend yield of at least 110% of the FTSE All-Share index.
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Liontrust Special Situations
This fund is an excellent way to tap into some of the UK’s most successful companies. It allows the experienced management team of Anthony Cross and Julian Fosh the freedom to pick their very best investment ideas from across the market-cap spectrum. The number they choose is fairly small (around 50) so you are trusting in their ability to pick winners. To do this, they follow a rigorous process that involves hunting down companies with characteristics or assets that are difficult to replicate. This prevents others from competing easily and therefore helps a company sustain its profits and growth. The investment process results in a portfolio of more dependable companies that are less sensitive to broader economic cycles. This has typically given the fund more resilience in tougher times.
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Threadneedle European Select
This is a favourite fund of ours and one we consider a core choice for investors in Europe. It is managed by Dave Dudding, winner of the 2013 Investment Week Fund Manager of the Year in the European category. Dudding seeks to identify dependable companies with a sustainable competitive advantage and his focus is on those that can grow their earnings and therefore raise dividends by more than inflation over time. High on his radar are companies that are positioned to grow market share and that are good at innovating. Consumer goods companies often fit this profile, which is why the fund has a high weighting to them. Companies such as Unilever and Nestlé are good examples. Dudding’s focus is on companies exclusively rather than the short-term gyrations of the market and his process has proved particularly robust in difficult market conditions.
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Aberdeen Asia Pacific
We consider this fund a great all-rounder. Apart from Japan, it covers the whole of the Asia Pacific region, including Australia and India. There is also the Aberdeen Asia Pacific & Japan fund which includes Japan in its portfolio. Both are managed by the highly respected Hugh Young who oversees an extremely well-resourced team based in Singapore. Young’s style is good old-fashioned stock picking and he focuses on high-quality companies that have solid and visible earnings. The portfolio has a fairly low turnover because Young’s approach is to seek out attractive companies and benefit as their potential is realised over the long term. The flip side of this is that when markets are rising rapidly as money piles into companies that are cheap but not necessarily very sound, these funds may get left slightly behind the benchmark for short periods.
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GLG Japan Core Alpha
Access an impressive collection of iconic Japanese companies such as electronics giant Sony – maker of PlayStation – Nintendo, which unleashed Super Mario on the world, and stalwart Panasonic with its collection of household appliances, TVs and cameras. Manager Stephen Harker singles out large companies that he believes are trading below their ‘correct’ valuation.
His portfolio is fairly concentrated (approximately 40 companies) and he takes bold sector and stock positions including contrarian calls, which can lead to volatility and periods of performance that are out of line with the market. While this might make for a rollercoaster of a ride, we believe growth prospects for the future are excellent. GLG also operates a currency-hedged version of this fund to help investors mitigate the impact of currency movements.
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By downloading our free Premier Selection guide you can see our full range of top-rated funds and investment trusts across all sectors that our research analysts believe are of the highest quality and most likely to deliver for you over the long term.
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