Fund picks for a royal baby’s junior ISA

5th May 2015


As the Royal Family celebrates the birth of baby Charlotte, Andy Parsons, head of investment research at The Share Centre, suggests three funds for new parents considering opening a Junior ISA…

Investing in the stock market could provide the best returns when investing for young people. We recommend that new parents looking to build a nest egg approach this by investing little and often into a Junior ISA. With no fixed rate of investments, parents do not have to scrimp and save just to put money away, and might well be surprised with the lump sum they end up with by adulthood.

A little can go a long way when you start investing early

The annual subscription limit is £4,080 this tax year, and the investment period could span up to 18 years. Parents putting away the maximum amount of around £340 pcm could have saved £70,000-£80,000 by adulthood. And in addition, we always strongly recommend that any income generated is automatically re-invested to add greater weight to the power of compounding returns.  Data shows that, over the long term, shares almost always produce a better return than cash held in savings accounts. The key is to achieve a good balance of growth and risk. This means that even parents who save little and often may be able to build up a reasonable nest egg by the time the young person reaches adulthood.

As the Junior ISA rolls into an adult ISA at the age of 18, it helps build familiarisation with the benefits of investment and financial house-keeping at an early age, setting up young adults with financial knowledge for life. It can help young people fund the important milestones in life, such as contributing to ever-increasing student fees or as a deposit for first-time home buyers.”

Three funds for parents considering investing are: the CF Woodford Equity Income fund, the Legg Mason Clearbridge US Aggressive Growth fund and the CF Miton UK Value Opportunities fund.

CF Woodford Equity Income fund

With the fund approaching its first anniversary, investors remain keen to invest in and benefit from the expertise and knowledge of one of the industry’s most highly respected fund managers, Neil Woodford.

For those investors who have followed Woodford’s extremely successful investment career, they will be pleased to see that the tried and trusted investment approach on which he forged his reputation has been implemented here. The core fund is built around the top ten holdings that are proven quality growth companies with strong business models, strong management, strong balance sheets and good cash flow.

Current holdings include Astrazeneca, Glaxo, BAT, BT, Imperial Tobacco and Capita. Investors seeking a core UK dominated equity income investment may be best suited to this fund.

Legg Mason Clearbridge US Aggressive Growth fund

The Legg Mason Clearbridge US Aggressive Growth fund is one seeking to generate long-term capital appreciation by investing in the securities of US companies. The investment managers select companies that they believe are experiencing, or have the potential to experience, above-average growth of earnings and/or cash flow

With current holdings including Comcast, Sandisk and Biogen, and a strong preference at present for the Healthcare and Information Technology sectors, this fund will generally focus on North America; however there may be occasions when they invest outside of this geographical arena. Conviction is given to the top 10 holdings, which generally comprises around 50% of the overall portfolio, while the remainder and tail aid the portfolio’s development.

CF Miton UK Value Opportunities fund

For investors seeking a fund with the potential to offer rewarding growth opportunities predominantly through UK exposure, the CF Miton UK Value Opportunities fund may be apt.

Fund managers George Godber and Georgina Hamilton seek to identify UK companies that they believe are trading at a significant discount to their intrinsic value, through a robust, bottom-up stock selection policy. Given its short investment history, the team has already demonstrated a remarkable stock-picking ability and we believe they will continue in the same vein.



Leave a Reply

Your email address will not be published. Required fields are marked *