As the new tax year unfolds, investors are reassessing their strategies in light of fluctuating market conditions and rising inflation. With the annual ISA allowance set at £20,000 per person, now is an opportune moment to explore investment options that could outperform traditional cash savings. Five financial experts have shared their top fund picks for this tax year, highlighting opportunities for diversification and potential long-term gains.
The Case for Stocks and Shares ISAs
The current economic climate has left many investors feeling uneasy. Stock markets have experienced notable volatility, causing hesitation among those who are new to investing. However, experts assert that a stocks and shares ISA is likely to yield better returns over time compared to cash ISAs, especially given the current average worth of over £65,000 for stocks and shares ISAs versus just £13,500 for cash alternatives.
Dan Moczulski, managing director at eToro UK, points out the stark difference in returns: “With UK inflation hovering around 3 per cent recently, it’s not ideal to keep cash. In the past year, a typical stocks and shares ISA saw an average growth of around 11 per cent, while cash ISAs returned just 3.48 per cent.” This disparity underscores the importance of considering investments that can keep pace with inflation.
Expert Fund Picks for 2026
Scottish Mortgage FTSE 100
Annabel Brodie-Smith, communications director at the Association of Investment Companies, recommends the Scottish Mortgage FTSE 100 investment trust. Managed by Baillie Gifford, this fund is known for investing in innovative private and public companies, including high-profile names such as SpaceX and Meta. Currently trading at a 5 per cent discount and featuring low fees of 0.31 per cent, this trust is suited for those with a higher risk tolerance. Over the past year alone, it has risen by 27 per cent and boasts a remarkable 68 per cent growth over five years.
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 net assets of £2.95 billion and a mere charge of 0.1 per cent, this fund provides a compelling opportunity for investors seeking stable returns. “Investing in UK government bonds can yield approximately 4.95 per cent compounded over ten years, offering a 62 per cent return before charges,” Miller explains. With gilt yields at multi-decade highs, this fund represents a low-risk option with significant tax advantages.
Man Income Fund
Paul Agnell, head of investment research at AJ Bell, highlights the Man Income Fund, which targets undervalued UK companies across various market caps. The fund managers employ a pragmatic approach, focusing on firms with strong cash flows and assets. Having seen an impressive 28 per cent increase in 2025, this fund is off to a strong start in 2026, climbing over 10 per cent in the initial months. With a charge of 0.9 per cent, it provides an attractive option for those looking to capitalise on undervalued stocks.
Murray International Fund
Philippa Maffioli from Blyth-Richmond Investment Managers recommends the Murray International Fund, known for its emphasis on global diversification and reliable income streams. With a yield of around 3.5 per cent, the fund is not tethered to the UK market, allowing for risk dispersion across different regions. Under the management of Martin Connaghan and Samantha Fitzpatrick, it has delivered a 36 per cent return in the past year and 60 per cent over five years, all while maintaining fees at a competitive 0.5 per cent.
Pantheon Infrastructure Plc
Jonathan Moyes, head of investment research at Wealth Club, suggests Pantheon Infrastructure Plc for investors seeking exposure to global infrastructure. This trust invests alongside leading infrastructure managers and includes assets such as data centres and renewable energy projects. Notably, it trades at a 13 per cent discount to its net asset value, presenting potential opportunities for investors. While it has risen by 30 per cent in the last year, it is crucial to note that this is a higher-risk investment, suitable for those looking to diversify their portfolios.
Navigating Investment Costs
When selecting investment platforms, be mindful of potential share dealing costs, which can erode your long-term gains. It’s advisable to seek platforms that minimise these fees, ensuring that your investment works for you over time.
As with all investments, there is an inherent risk to your capital, and it is possible to receive back less than what you initially put in. Past performance is not a guarantee of future results, so careful consideration is essential.
Why it Matters
Choosing the right funds for your ISA can significantly impact your financial future. With inflation eroding the value of cash savings, exploring diversified investment options is more critical than ever. By leveraging expert insights and understanding the unique benefits of various funds, investors can make informed decisions that align with their long-term financial goals. As you consider your investment strategy for the 2026 tax year, remember that informed choices today can lead to greater financial security tomorrow.
