Interactive Investor

Last-minute ISA investment ideas

29th March 2022 14:04

Jemma Jackson from interactive investor

interactive investor experts share some ideas and remind DIY investors of fast-approaching ISA deadlines.

With the end of the tax year less than a week away, time is running out for investors to make full use of this year’s £20,000 ISA allowance. The end of the tax year is 5 April and if you don’t use it, you lose it.

Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: interactive investor, says: “Amid the ever-rising cost-of-living, our cash has to stretch much further. Shielding your investments in a tax efficient wrapper is the easiest way to make your money work harder. After all, income and gains made from investments within the ISA wrapper are not subject to tax, so this is a brilliant opportunity to grow your wealth.”

What you decide to put in your ISA is wholly dependent on your financial goals, investment time horizon and risk tolerance.

Upcoming ISA deadlines

However, it is easy to get caught out. Below, interactive investor, the UK’s second-largest investment platform for private investors, outlines each ISA and Junior ISA deadline to have in your diary.

It is important to read these carefully – as there are slight variations on deadline between each type of application.

Bed & ISA and new JISA applications, for example, have an earlier deadline as it is more complex to administer. Bed and ISA transfers involve moving that money into a more tax friendly ISA, although you might incur CGT, depending on your circumstances. This can be a great tool for those with investments outside a tax wrapper who haven’t fully used their tax allowance.

New ISA applications: Deadline – 11:30pm, Tuesday 5th April

New JISA* applications: Deadline - 11:59, Monday 4th April

Add money to your ISA/JISA by debit card: Deadline – 11:30m, Tuesday 5th April

Add money to your ISA/JISA by internal transfer: Deadline: 11:30pm, Tuesday 5th April

Add money to your ISA/JISA by bank transfer: Deadline: 11:59, Monday 4th April

Bed & ISA/JISA instructions – 4:30pm, Wednesday 30th March

Need some last-minute ISA inspiration? Below, our experts share some ISA ideas

Dzmitry Lipski, Head of Funds Research, interactive investor, outlines some picks from ii’s ACE 40 list: “Montanaro Better World Fund invests in small and mid-cap companies, which support the United Nations Sustainable Development Goals. The fund has been managed by highly regarded managers Charles Montanaro and Mark Rogers since its launch in April 2018, and these managers focus on six impact themes: Environmental Protection, Green Economy, Healthcare, Innovative Technology, and Nutrition and Well-being.

“Following a strict three-stage process, the managers aim to establish if a company is making a good impact, and this is done through a variety of screening tools as well as meeting company management regularly. The outcome is a concentrated portfolio of around 50 quality growth companies, benchmarked against the MSCI World SMID index. Historically, mid and small-cap funds have outperformed their larger-cap counterparts over the longer term, but they’re generally considered to be more riskier investments, so should be used mainly for satellite allocation in a global well diversified portfolio.”

For investors seeking a high and raising income from responsible equity investments

Dzmitry Lipski, Head of Funds Research, interactive investor, adds: “Another investment idea ahead of the ISA deadline is Baillie Gifford Responsible Global Equity Income fund, which aims to achieve sustainable income and capital growth over the longer term, by investing responsibly in global equities. The managers, James Dow and Toby Ross, exclude so-called ‘sin stocks’ in certain industries such as tobacco and alcohol, and follow the principles of the UN Global Compact. This covers important areas such as human rights, labour, the environment, and anti-corruption. In addition, within its top holdings are big names such as Novo Nordisk, Procter & Gamble, Microsoft, and Nestle. This makes the fund a compelling choice for those seeking a high and rising income from responsible equity investments. The fund is also competitively priced, with an ongoing charge of 0.53% and yielding over 2%.”

For investors with a balanced risk appetite, looking to invest in growth markets

Dzmitry Lipski, Head of Funds Research, interactive investor, explains: “Lastly, Climate Assets Fund aims to deliver long-term growth and income, through an actively managed, multi-asset investment approach. Claudia Quiroz of Quilter Cheviot has managed this fund since 2010 and focuses on investing in businesses involved in creating solutions to some of the world’s long-term challenges, enhanced by globalisation, including climate change, resource scarcity, and population shifts. The portfolio is invested in different asset classes, including global equities, bonds, and alternative investments – making it well diversified. Equity exposure is currently 65%, bonds 15% and alternatives 11%. The fund sits in the IA Mixed Investment 40%-85% Shares and is suitable for investors who have a balanced risk appetite and are seeking to invest in the growth markets of sustainability and environmental technologies, but with lower volatility of returns.”

Personal views - what is the ii team thinking about?

Investment trusts

Kyle Caldwell, Collectives Specialist, interactive investor, says: “We’ve seen in the first two months of 2022 a significant change in the stock market winners and losers of recent years – with value shares outperforming growth shares. The question going forward is whether this will be sustained.

“There’s been plenty of false dawns over the past decade, but I think there’s a good chance this market rotation will continue because the big driver that has boosted value shares has been the tightening of monetary policy by central bankers. With inflation at its highest level in decades in both the UK and the US, there’s one way for interest rates to go, and that is higher.

“This backdrop benefits value shares because such companies tend to be more economically sensitive and make a lot of profit today. High-growth sectors, including technology shares, are negatively impacted by high inflation and increases in interest rates because both devalue their expected future earnings.

“In my stocks and shares ISA I am probably a bit too overexposed to technology shares. To strike more of a balance in terms of investment style and to capitalise from the potential return to form for value shares an investment trust I am considering is Temple Bar (LSE:TMPL).”

“This trust is managed by Nick Purves and Ian Lance. The duo place a lot of emphasis on financial strength, so invest in good quality companies that for some reason are undervalued by the market. This is a key attraction for me, as I don’t want my money to be subjected to the risk of backing more structurally challenged companies that could recover strongly but could also be in terminal decline. As an added bonus, Temple Bar is currently trading on a small discount, meaning investors get to buy a portfolio of undervalued shares at an even cheaper price.”

Earlier this month, ii’s experts also outlined some JISA ideas to help save for your children’s future.

Transition to renewable energy

Sam Benstead, Deputy Collectives Editor, interactive investor, says: “As we enter the run-up to the ISA deadline, one of the biggest investment stories is the conflict in Ukraine and its impact on the oil price. Oil is close to doubling over the past year and prices could keep rising well into 2022 as Russia – and its oil and gas exports – are cut off from the global economy.

“The crisis has exposed how reliant many countries are on Russian oil and gas. My view is, this will provide a wake-up call to Western governments that they need to secure energy independence. Rather than ramping up investment in finding new oil reserves, I think it will play a role in speeding up the transition to renewable energy, such as wind and solar power.”

“In light of this, the fund I am adding to my ISA this year is Schroder ISF Global Energy Transition. Launched in 2019, it buys companies that are essential to economies going green, including wind turbine manufacturers, electricity utilities and battery companies. These should profit from a new wave of investment.

“The fund has dropped about 5% this year and there could be further shot-term pain as investors react to the war by buying gold and selling stocks. Such a fund, however, is not for the faint hearted as it is a sector specialist. However, for those willing to stomach the risk not only is the long-term outlook for this fund now better, but the companies are cheaper.”

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.

Please remember, investment value can go up or down and you could get back less than you invest. If you’re in any doubt about the suitability of a stocks & shares ISA, you should seek independent financial advice. The tax treatment of this product depends on your individual circumstances and may change in future. If you are uncertain about the tax treatment of the product you should contact HMRC or seek independent tax advice.