24th March 2016
For those looking to spice up their child’s junior ISA portfolio one broker is tipping utility group National Grid and household firms company Reckitt Benckiser as ideal stocks to add.
Saving into a stocks and shares Junior ISA, or JISA, is a decent way to build up a nest egg. You can invest up to £4,080 per year, which remains tax -free until your child reaches 18.
But while investing – especially in individual shares – will always carry risk, the earlier you start investing the greater the chance you will ride out the volatility of the stock market over the long term.
Ian Forrest, investment analyst at broker The Share Centre, said: “For those looking for stocks to add to a JISA, we would recommend National Grid and Reckitt Benckiser. Both deal with everyday necessities for which there is constant demand, resulting in relatively steady earnings and cash flow streams. We are encouraged by the long-term prospects at both companies.”
Forrest said he has long been fans of National Grid, which continues to see “a good level of progress and an improving outlook for its operations in the US”.
It boasts a dividend yield of around 4.65%, and this is set to grow at least in line with inflation. As those dividends are reinvested there is the potential to grow your child’s JISA portfolio steadily over time.
Reckitt Benckiser is the world’s largest producer of household goods and cleaning products, owning brands such as Cillit Bang, Vanish and Harpic. Forrest noted that its annual results in February were ahead of expectations, showing a rise in net profit to £1.74bn, boosted by a focus on higher-margin consumer health products.
He said: “Revenue increased by 5% and the dividend for the year was unchanged at 139 pence. The company has been an excellent and consistent performer over the last 15 years, and with its recent expansion into emerging markets we see strong potential for the future.”
For those seeking a fund for their child’s JISA, he tips CF Miton UK Value Opportunities and Woodford Patient Capital as relatively low risk options for the long term.
The investment objective of the CF Miton UK Value Opportunities fund is to achieve long-term capital growth. It will invest mainly in UK companies, which the manager considers to be undervalued by the market.
“The fund was only launched back in March 2013, and yet despite a short investment history, the management team has already clearly demonstrated a remarkable ability for stock-picking and we believe they will continue to do so in the same vein,” added Forrest.
Woodford Patient Capital, which is run by one of the UK’s best-known fund managers, Neil Woodford, according to Forrest is “for investors that have an eye on the long term when it comes to returns”.
He said: “The fund aims to achieve long-term capital growth by investing in a portfolio consisting predominantly of UK companies, both quoted and unquoted. The trust will aim to deliver a return in excess of 10% per annum over the longer term.”