Six fund options for your Isa

18th February 2015


As investors look for opportunities to use their ISA allowance before the end of the tax year, Andy Parsons, head of investment research at The Share Centre, sets out six funds that have caught his eye…

CF Miton UK Value Opportunities

“The CF Miton UK Value Opportunities fund may have slipped under the radar for many investors given its relatively short investment history, however it offers rewarding growth opportunities through exposure to the UK.

“Using a robust, bottom-up stock selection policy, fund managers George Godber and Georgina Hamilton identify UK companies they believe are trading at a significant discount to their intrinsic value. Companies must have strong balance sheets and good cash flow.  The majority of underlying investments are mid to small cap companies.

“Despite its short investment history, this fund adopts a deep value investment strategy with the managers having already demonstrated their stock-picking ability, and we believe they have the attributes to continue doing so.”

First State Global Listed Infrastructure

“Investment in infrastructure is a strong long-term argument and theme, particularly given the continuing economic challenges facing the world. The First State Global Listed Infrastructure fund is suitable for investors wanting global equity exposure whilst retaining a defensive, more balanced return, with many of the businesses having inflationary linked pricing embedded.

“The companies often found in this fund play a vital role in delivering the world’s roads, rail networks, airports, seaports, utilities and energy pipelines. The businesses providing these key services are naturally seen as defensive and mature, suggesting reasonable levels of dividends and dividend growth. Meanwhile, high barriers to entry, strong pricing power, sustainable growth and predictable cash flows make the asset class a relatively safe haven in an uncertain financial world.”

Legg Mason Clearbridge US Aggressive Growth

“Given that the US market is hailed as the most efficient in the world, there has been much debate as to whether US fund managers can outperform it. We believe Evan Bauman and Richie Freeman, managers of Legg Mason Clearbridge US Aggressive Growth fund, are a prime example of a management team that are capable of such strong performance.

“Driven by a pure bottom-up stock picking approach, the fund generally looks to hold between 50 and 70 stocks. The top 10 holdings generally comprise of around 50% of the overall portfolio, while the remainder aid the portfolio’s development.

“The managers seek to identify opportunities from across the market cap. However, with an extremely low portfolio turnover rate and a strict valuation discipline, investors are unlikely to see any significant changes to market cap and sector exposure in the short term.”

Invesco Perpetual UK Strategic Income

“Historically, the High Income and Income fund was the focus for investors seeking a UK equity income investment from Invesco Perpetual. However, the Invesco Perpetual UK Strategic Income fund is an alternative offering that may prove to be just as fruitful.

“Fund manager Mark Barnett, who also manages the High Income and Income funds, adopts an unconstrained style. He seeks companies that he perceives are  undervalued, with clear visibility on revenue performance, profits and cash flow, and an ability to maintain and grow dividends indefinitely. Ideally, these companies will place shareholder value at the heart of everything they do.

“The portfolio generally comprises around 60 to 80 stocks and the manager always considers the potential downside to an investment. It is worth noting the fund is better suited to a market trading sideways or with less momentum.”

Polar Capital Healthcare Opportunities“The Polar Capital Healthcare Opportunities fund gives investors exposure to a sector that has continually delivered positive returns in recent years. Given the global rise in ageing populations, obesity and the wealth of the emerging economies, we believe advances in medical and healthcare technology will continue at a rapid pace.

“Due to the nature of companies in this sector, the fund is likely to retain significant geographical exposure to the US, with market cap weightings split across the spectrum. However, it is worth noting that investing in a fund that specialises on a particular sector increases the level of risk. For investors seeking an opportunity to identify ground breaking advancements, this fund may well provide appropriate rewards over the medium to longer term.”

Rathbone Global Opportunities

“Global investments offer investors exposure to the world’s abundance of high-quality, well-managed, financially strong and innovative companies with pricing power. We believe the Rathbone Global Opportunities fund is ideally suited to take advantage of these.

“James Thomson has been at the helm since its inception in 2001. With a flexible, unconstrained investment mandate, James can be specific with his investments and avoid sectors that don’t appear to present investable opportunities. The portfolio comprises between 40 and 60 companies that demonstrate a scalable and repeatable strategy without incurring significant costs. He also looks for a clear business model, barriers to entry and catalysts for share price movement. Investors will find that this fund has no direct exposure to the emerging markets, has a greater mid-cap presence than many of its peers and there is no currency hedging.

“It is worth noting, James is not a value investor, and will therefore be prepared to pay a premium to own a company he has clearly identified as an opportunity.

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