By Michelle McGrade, chief investment officer of TD Direct Investing
With just seven weeks left before tax year end, many investors are wondering what to do with their £15,240 ISA allowance.
In addition to the impact of poor returns from cash after the Bank of England kept interest rates at 0.25% earlier this month, rising inflation is continuing to eat into real returns and eroding purchasing power.
With current market conditions in mind, where should investors look for inspiration? Below, I’ve included a varied selection of opportunities and related funds that investors might want to consider:
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Henry Dixon buys companies that are cheap, have been forgotten by the markets and have a promising upside. He has a disciplined approach and conducts thorough analysis of company balance sheets to understand the company’s assets and liabilities. With more government spending promised, Henry’s portfolio of mainly UK domestic mid-sized companies, which have been held back in the last few years, have the ability to stage a comeback.
Last year, we crowned Mark Slater as the best performing fund manager with a track record of more than 10 years in our Best of British list. Mark tends to focus on small- and mid-sized companies and he gets to know the ones in his portfolio very well before he buys them. He also typically holds them for a long time. The portfolio was hampered last year by the EU referendum result, but Mark stands by it and he is excited for the prospects of the companies within it.
Over 80% of the world’s population live in emerging market countries. In considering this statistic, JP Morgan notes that these countries arguably “…house the consumers of the future” and represent an asset class that is growing considerably faster than developed markets. At M&G, fund manager Matthew Vaight likes investing in cheaper companies and is encouraged by their improving capital management trend. Emerging markets are a good portfolio diversifier.
Last year, OPEC and non-OPEC oil producing countries announced that they would stem the supply of oil so that oil prices would rise to acceptable levels. We believe that there is the will to do this and at $70-75 a barrel, companies will again have the ability to become profitable. The portfolio is concentrated, with only 30 names in it and is managed by a highly experienced and dedicated team of three: Will Riley, Jonathan Waghorn and Tim Guinness.
Mike Fox, the fund’s manager, believes the commitment to limit the rise in global temperatures at the Conference of the Parties (COP) Paris climate change convention in December 2015, could be a catalyst to making sustainable investing even more mainstream. This is despite Donald Trump’s recent rhetoric on the subject. China and the rest of the world are committed to improving the planet, but there is more to it than just the environment – it’s the way we live and work too. Mike and his team identify companies that are run by savvy business people, with the aim of making improvements one way or another for our world.
For those perhaps a little short on time or who prefer a passive fund solution, take a look at our Quick Start Funds which will help you get set up and investing quickly. Comprising a range of Vanguard LifeStrategy portfolios which offer global exposure to a mix of assets, these funds are split into three levels of risk and return, with the Vanguard LifeStrategy 80% equity fund in particular being one of our most popular funds.