Tuesday 26 February 2019 11:28 am Interactive Investor Talk

Funds and investment trusts for all the family

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by Jemma Jackson from interactive investor.

As the current tax year approaches an end, interactive investor selects some great funds for your ISA.

Whilst reviewing or selecting an ISA portfolio might seem like a solo pursuit (the clue is in the name – Individual Savings Account), it doesn't have to be. interactive investor explains why there are some very good reasons for making ISAs a family affair – and picks out some potential funds for all the family, too.

Rebecca O’Keeffe, Head of Investments, interactive investor says: "Whilst ISAs might seem very much about the individual, if you have a partner or family, there's a lot to be said for taking a broader view. For example, with the adult ISA allowance of £20,000, and £4,260 for children, a (very lucky) family of four could squirrel away nearly £50,000 into ISAs tax-free this tax year.


"But whatever shape or size your family is, and even if income and capital gains tax issues feel like a long way off right now, much smaller sums also add up over the long term. An ISA wrapper is an ideal way to future-proof your portfolio. Given that a parent has so many competing short term and long term financial goals – saving for retirement, perhaps university tuition fees, a deposit on a child’s first property or a wedding, it makes sense to make ISA investing a family affair."

Funds for all the family – don't forget investment trusts!

With ISAs coming up to their 20th anniversary, data from the Association of Investment Companies (AIC) for interactive investor suggests that investment trusts, whilst lesser known amongst many investors, are worth considering alongside open-ended funds.

Whilst there are no guarantees, and past performance is no guide to the future, according to the AIC, over the last twenty years to 31 January 2019, the average investment trust has produced annualised growth of 8.46 per cent in share price total return terms, compared to 5.91 per cent for the average open-ended fund in total return terms.

Rebecca O'Keeffe says: "We are huge fans of investment trusts, which tend to have strong long-term performance, albeit with the potential for a bumpier ride along the way. But whilst they have some unique structural differences, it's what's on the inside that counts – the stock selection!

"Both funds and investment trusts are all aiming to do the same thing – spread risk by investing in a broad range of investments on your behalf. Our Super 60 list of rated funds includes funds, investment trusts and ETFs."

Interactive investor's family fund picks:

For parents:

Fidelity Global Dividend

Dzmitry Lipski, Investment Analyst, interactive investor says: "Fidelity Global Dividend takes a defensive approach to generating income while preserving capital. Run by highly experienced manager Dan Roberts, the fund focuses on quality large companies around the world that pay sustainable dividends.

"Among its top holdings are Procter & Gamble (NYSE:PG), Roche (XETRA:RHO), Diageo (LSE:DGE) and Royal Dutch Shell (LSE:RDSB). The fund has delivered solid returns for investors over the longer term with relatively low volatility."

Fundsmith Equity Fund


Dzmitry Lipski, Investment Analyst, interactive investor, says: "This is a high-conviction, concentrated strategy for the longer term. The manager invests in a concentrated (around 20-30 stocks) portfolio of large, liquid stocks then holds them for the long term – this is a buy-and-hold strategy. The fund is invested in quality growth, defensive companies."

Quick Start funds

For parents yet to take the plunge, interactive investor has identified some quick start funds. Research by interactive investor using Opinium Research* suggests that not knowing where to begin is a major barrier for would be investors. Some 40% of consumers say they are not confident about investing, and of those, one in five (20%) say the main barrier to investing is not knowing where to begin.

interactive investor has scoured the multi-asset funds landscape high and low and identified three best in class 'Quick Start' funds to help investors get started. With three different equity-to-bond weightings, they can suit a variety of risk profiles.

For the kids

Rebecca O'Keeffe investor says:

"If you start them off early enough, then your kids potentially have a longer investment horizon which means that you can take more risk on their behalf."

F&C Investment Trust

Rebecca O'Keeffe: "Having served shareholders for more than 150 years, this is a globally diversified one-stop investment shop which has been able to raise its dividend each year for an impressive 47 years. F&C Investment Trust (LSE:FCIT) has good geographical diversity and has additional diversification through exposure to unlisted assets and private equity."

Scottish Mortgage Investment Trust

Rebecca O'Keeffe says: "Our most popular investment trust across all age groups and genders, this is one for every portfolio and it is hard to find active investments of this pedigree with an ongoing charge of just 0.37 per cent. Scottish Mortgage (LSE:SMT) is another global fund which invests in equities all over the world, but also fully utilises the investment trust structure by investing in unlisted securities. It is another AIC dividend hero, too, having raised its dividend for 35 straight years."

Artemis US Smaller Companies

Dzmitry Lipski says: "Artemis US Smaller Companies provides investors with exposure to the best of America's innovative, entrepreneurial and fast-growing small companies. With a focus on long-term capital growth, investing in US smaller companies is a great way to start investing for your child.

"This is a high conviction, concentrated portfolio of around 50 to 60 companies. Because smaller companies receive less attention from analysts than their larger peers, there is scope for experienced managers such as Cormac Weldon to take advantage of this. The manager has an excellent long-term track record of delivering performance throughout different market cycles."

*The consumer research was conducted by Opinium Research between 29 January – 1 February 2019 amongst 2,008 adults.

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.

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