Isa tips for the adventurous investor
Some beleaguered investors are taking a more bullish approach to investing. So after gathering cautious recommendations, investment correspondent, Philip Scott, investigates option for intrepid Isa investors.
A little bit of adventure: Perhaps not for everyone
Despite the on-going stock market turmoil, embattled savers appear to be taking a more aggressive approach to investing, according to Barclays. With decent rates on savings accounts growing more scarce.
Isas, or Individual Savings Accounts, let you save or invest a limited amount of money every tax year - presently £3,600 for cash and £7,200 for cash and equity accounts - the returns and growth from which are protected from the taxman.
In 2007/08, £25.2bn was subscribed into cash Isas compared to £10.4bn into stocks and shares Isas.
For the best Isa advice on the web visit This is Money's Isa centre
Remember to review your investments every year monitoring performance, the fees being charged and that the spread of investments continues to match the risks you are willing to take.
Geoff Tresman, from Punter Southall Financial Management, says: 'A cautious investor should have a portfolio that consists of 40% gilts, 30% cash, 15% corporate bonds and 15% UK equities.
'Balanced investors could have 40% in fixed interest, 35% in UK equities, 20% in global equities and 5% in the resources sector.
'The more adventurous could hold 70% in global equities – split between the UK (35%), Japan and the Pacific (15%), the US (10%) and emerging markets (10%), plus 20% in corporate bonds and 10% in resources.'
Tables: best-selling Isas
The following are all considered high-risk investments but with potentially high rewards in the long term. If in doubt, speak to a financial adviser: Find an IFA.
Top IFA recommendations for adventurous Isa investors
Andy Gadd, Lighthouse Group, tips Junior Oils Trust
The Junior Oils Trusts invests in small oil stocks which the manager, Angelos Damaskos, believes have the potential to grow rapidly. Typically these investments may also be targets for a takeover by one of the multinational oil producers, who are discovering that buying other companies is the easiest way to increase their own oil reserves.
The fund seeks out shares in strong companies with plenty of cash on their books, as well as groups with proven oil reserves. The fund is very focused holding around 23 stocks and keeping a little cash aside to take advantage of any new share issues that come to the market. Gadd says: 'The fund is of course linked to the oil price and although it has fallen back severely I do believe it will rise again – oil remember can be a very volatile asset class.'
The oil price has fallen from a high of $147 last summer to under $40. It has recovered to above $50 in recent weeks.
Mick Gilligan, Killik & Co, rates North At
North Atlantic Smaller Companies is an investment trust managed by Christopher Mills of JO Hambro Capital Management (JOHCM). Its aim is to provide capital growth through investment in a portfolio of smaller companies principally based in countries bordering the North Atlantic Ocean. The North Atlantic Smaller Companies balance sheet is strong.
It remains fairly cautious for now. Around 29% of the fund was held in cash, as at 31 December. The balance sheets of the shares it holds are also in good shape. Gilligan says: 'Although the economic and market outlook for smaller companies remains difficult, we believe that this portfolio is well positioned to weather the storm.'
Andy Parsons, The Share Centre, rates Allianz RCM BRIC Stars A Accumulation Fund
Launched in 2006, the fund returned a spectacular 58% in 2007. However, this was prior to the tough market conditions of 2008, when the fund lost 54%. Despite a significant fall in its price this year, the Allianz Bric Fund focuses on the four key emerging market regions of Brazil, Russia, India and China. He says: 'Although a riskier investment, The Share Centre believes this fund will benefit in the long-term as these emerging markets will have a strong input to future global development.'
Martin Bamford, Informed Choice, recommends Lazard Emerging Markets
The more speculative investor might look at the opportunities available from emerging market economies after substantial falls in their stock market values last year. The fund takes a global approach and offers unconstrained access to global emerging markets. Bamford says: 'Rather than focus an investment on the four 'BRIC' economies (Brazil, Russia, India and China), the Lazard Emerging Markets fund has a more diverse approach, including South Africa and South Korea amongst others. The fund is a consistent performer and a good way to access the longer term opportunities presented in this sector.'
Mark Dampier, Hargreaves Lansdown, likes Aberdeen Emerging Markets
Dampier believes there is an enormous potential for recovery in the emerging markets of the world and he feels that the Aberdeen Emerging Markets fund, managed by Devan Kaloo, could be a good way to get exposure. The fund benefits from a wealth of experience dating back to 1985 and has been through many economic cycles. It has investments across a very wide variety of countries, notably, Brazil, India, Mexico, Korea and Thialand. Dampier says: 'The team's focus is on seeking out good quality management, preferring businesses with strong prudent accounts that are cash generative. They do not have a racy approach, but we think this is precisely why Aberdeen has been so successful in emerging markets, boasting a superb track record over the longer term.'
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