As the new tax year commences, investors are keenly assessing their options for maximising their Individual Savings Accounts (ISAs) with the £20,000 allowance now in place. With the stock market exhibiting significant volatility, experts suggest that diversifying investments into stocks and shares ISAs could yield better long-term returns compared to traditional cash ISAs. This article highlights five fund selections from industry professionals, each offering unique strategies and potential for growth.
The Landscape of Investment
The current economic climate, marked by elevated inflation rates near 3%, compels investors to reconsider cash holdings. Dan Moczulski, managing director at eToro UK, notes that over the past year, stocks and shares ISAs have averaged an impressive 11% return, starkly contrasting with the meagre 3.48% yield of cash ISAs. The substantial disparity in growth underscores the importance of strategic investment choices.
Investors seeking to navigate the complexities of the market can find solace in expert recommendations. We consulted five financial specialists to identify one fund each would personally endorse, providing valuable insights into potential avenues for growth.
Diverse Fund Selections
Scottish Mortgage FTSE 100
Annabel Brodie-Smith, communications director at the Association of Investment Companies (AIC), champions the Scottish Mortgage FTSE 100 investment trust, managed by Baillie Gifford. This fund seeks to invest in a mix of transformative private and public companies, including prominent names like SpaceX and Meta. With an attractive 5% discount and low management fees of 0.31%, this trust is tailored for long-term investors prepared to embrace higher risk. Over the past year, the fund has surged by 27%, and its five-year performance reflects a remarkable 68% increase.
iShares Over 15 Years Gilts Index Fund (UK)
Alan Miller, Chief Investment Officer at SCM Direct, advocates for the iShares Over 15 Years Gilts Index Fund, which focuses on UK government bonds. With an impressive yield of nearly 5% compounded over a decade, Miller highlights this investment as a rare opportunity, particularly within an ISA wrapper where income remains tax-free. The fund’s minimal charge of just 0.1% per annum enhances its appeal. Despite its flat performance over the past year, the anticipated rise in interest rates positions this fund for better returns moving forward.
Man Income Fund
Paul Agnell, head of investment research at AJ Bell, presents the Man Income Fund as a compelling option for those seeking exposure to undervalued UK companies. Managers Henry Dixon and Jack Barrat focus on firms exhibiting strong cash flows and sustainable valuations, avoiding potential value traps. The fund has already gained over 10% in 2026, buoyed by contributions from banks such as Lloyds, Barclays, and Standard Chartered. With a management fee of 0.9%, this fund presents an attractive blend of growth potential and risk management.
Murray International
Philippa Maffioli from Blyth-Richmond Investment Managers recommends the Murray International fund, which combines global diversification with a steady income stream. With a yield of approximately 3.5%, Maffioli appreciates the fund’s emphasis on reliable cash flows rather than merely pursuing high yields. The current management team, led by Martin Connaghan and Samantha Fitzpatrick, continues to prioritise sustainable income alongside long-term growth. This fund has demonstrated robust performance, up 36% over the past year and 60% over five years, with a management fee of 0.5%.
Pantheon Infrastructure Plc
Jonathan Moyes, head of investment research at Wealth Club, advocates for Pantheon Infrastructure Plc, which aims to diversify investments away from traditional stock markets while offering equity-like returns over time. The fund focuses on infrastructure projects, including data centres and renewable energy, benefiting from long-term revenue streams. Currently trading at a 13% discount to net asset value, Moyes suggests that this fund holds promise for investors willing to accept higher risk. With a 30% increase over the past year, its ongoing charges stand at 1.29%.
Considerations for Investors
As with any investment, it is paramount to consider potential risks. Investors should also be mindful of share dealing costs, which can diminish long-term returns. Each fund’s performance is subject to market fluctuations and past performance does not guarantee future success. It is essential for investors to assess their individual risk tolerance and financial goals before committing to any investment strategy.
Why it Matters
The selection of the right funds within an ISA can significantly influence an investor’s financial trajectory. With inflation eroding the value of cash savings, shifting towards diversified investments could not only enhance potential returns but also provide a hedge against economic uncertainties. The insights from industry experts offer a foundation for informed decision-making, empowering investors to craft a portfolio that aligns with both their risk appetite and long-term ambitions.
