With tax hikes on the horizon as the general election looms, sheltering more cash in an ISA is a sensible move. The investment choices you make will depend on how long you wish to invest and how much risk you are prepared to take.
But every new year there brings a new fad investment and investors have lost money buying into trends that proved off the mark.
Advisors recommend buying into a range of sectors in order to avoid the pitfalls of fad investment
Martin Bamford, managing director of Informed Choice, says: “Longer investment terms and higher risk profiles should translate into equity focused ISA portfolios, although diversification across the different asset classes remains important to manage shorter term risks.”
There is still so much uncertainty around that it is unclear which sectors “will be the top performers over the short term”, he adds.
But for the long term he says “investors should pick sector themes that will stand the test of time”.
“Some themes we are considering for our clients include those that should benefit from the demographic changes in this country, including the healthcare, financial and leisure sectors,” he says. He also recommends oil and energy.
“As global oil supplies continue to dwindle, and demand for oil picks up as world economies come out of recession, the oil price has potential to be pushed even higher,” he says.
Certainly, natural resources has been one of the most lucrative investment areas in the past few years driven by strong performances in oil and metals such as gold and copper. As there is a finite supply of such resources, prices should be driven up over time. Big name funds to consider are JPMorgan Natural Resources (see right) and BlackRock Gold and General.
Bamford says we can also expect to see growing demand for renewable and green energy, so companies in this sector should also benefit over the longer term. He tips the IM WHEB Sustainability, managed by Clare Brook, who previously managed Jupiter Ecology. The fund invests in three themes; climate, water and demographics.
Many investors got their fingers burnt when the technology bubble burst and may have been put off the sector for good but given that technology touches all aspects of our lives, it is still a sector to keep an eye on. One fund that has had a consistently good record is Axa Framlington Global Technology Fund for those wishing to dip their toe in the sector again.
Smaller companies offer an opportunity for investors to get in early with a firm that may turn out to be heading for the FTSE 100 Index. If you wish to stay local, the Investec UK Smaller Companies Fund is one for consistency of performance and if you wish to get exposure in America, take a look at Schroder US Smaller Companies Fund.