With the end of the tax year less than two weeks away, our experts share some investment ideas.
With the end of the tax year less than two weeks away, time is running out for investors to make full use of this year’s £20,000 ISA allowance before they lose it.
While the economic impact of the pandemic as well as fears of inflation and rising interest rates continue to weigh on global markets, the current volatility should not put long-term investors off from taking full advantage of the tax breaks that come from using up your ISA allowance. After all, income and gains made from investments within the ISA wrapper are not subject to tax.
Stock markets can be volatile on a day-to-day basis, but a glance at history shows that they have a knack of delivering inflation-beating returns over long periods of time.
What you decide to put in your ISA is wholly dependent on your financial goals, investment time horizon and risk tolerance.
To help you on your way, our experts share some last-minute ISA investment ideas.
Pacific Assets investment trust
Dzmitry Lipski, Head of Funds Research, interactive investor, says: “Pacific Assets (LSE:PAC) Investment Trust is a good adventurous option for investors looking for exposure to Asian equities within an ethical framework.
“It invests across one of three sustainability sectors: sustainable goods and services, responsible finance, and required infrastructure. Manager David Gait’s investment philosophy differentiates him from the peer group because of his focus on the quality of management and the long-term sustainability of business models.
“The investment trust’s performance has lagged the sector average, largely owing to under exposure (compared to its peer group) to Chinese equities which were among the best performing in the world. The trust is trading at a discount of -8.9 at the time of writing, which could prove an attractive entry point if the manager’s style comes more into favour.”
WisdomTree Enhanced Commodity ETF
Dzmitry Lipski, says: “The WisdomTree Enhanced Commodity ETF (LSE:WCOB) provides broad and diversified commodity exposure, covering four broad commodity sectors: Energy, Agriculture, Industrial Metals and Precious Metals. Investors could consider commodities as a diversifier and a hedge against rises in inflation. Commodities should benefit from anticipated continued QE stimulus and the potential for inflation and dollar weakness – this ETF could be a useful addition to a well-balanced portfolio in this context.”
Richard Hunter, Head of Markets, interactive investor, says: “NatWest (LSE:NWG) could be a share to watch this year. The shares have more than doubled since the recent September low, which might signal that the garden may be rosier than many are currently thinking for the beleaguered bank. Even after such a spike, the shares remain down by 23% over the last three years.
“Should the rollout of the vaccine lead to a quicker than expected economic recovery, it could even result in provisions being significantly lower than the ones the banks announced last year, which ran to billions of pounds. Even so, NatWest is a bank which is simply awash with capital.
“Quite apart from a liquidity coverage ratio of 165% and a liquidity pool of £262 billion, the capital cushion has risen further to stand at 18.5%, as compared to 16.2% at the end of the previous year. How the bank deploys this capital in future will be strategically interesting, although the bank did show its financial mettle in recently acquiring a tranche of shares from the UK government, reducing the latter’s stake to 60% (59.8%) from 62% (61.7%).
“In the meantime, the resumption of a dividend payment is a start, even though the cost to the bank is of little consequence.”
Fidelity Global Dividend
Teodor Dilov, Fund Analyst, interactive investor, says: “For those seeking an income from their investments, we like Fidelity Global Dividend. There are five key investment characteristics that manager Dan Roberts holds dear: simple, understandable business models; predictable, resilient return profiles; healthy balance sheets; transparent financial statements and sensible capital allocation. This translates to a well-diversified portfolio of around 50 stocks with a focus on capital preservation and providing a stable and growing divided yield.
“The fund has consistently outperformed its Global Equity Income peers every calendar year, except for 2016 and 2017, but investors should not expect a “growth”-style returns since the strategy is positioned to provide a smoother journey through market turbulence.”
Vanguard LifeStrategy 80% Equity
Myron Jobson, Personal Finance Campaigner, interactive investor, says: “For investors who are comfortable with higher risks and who have at least five to 10 years to invest, we like Vanguard LifeStrategy 80% Equity fund, which offers a cheap (with an ongoing charge of 0.22%) way of gaining exposure to thousands of stocks across the globe.
“As the name of the fund suggest, 80% of the fund is invested in the stock market, with the remaining 20% invested in bonds and other fixed-income assets to add a splash of diversification with uncorrelated assets to balance investment risk.
“The sheer level of diversification offered by the fund means investments are protected in a way that funds investing in a handful of holdings aren’t, making it a good long-term option for many investors.”
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.