As the 2026 tax year commences, individuals seeking to optimise their investments within their ISAs are presented with a plethora of options. Amidst a backdrop of fluctuating markets, experts have identified several funds poised to offer robust growth potential and diversification. With inflation hovering around 3% and stock markets demonstrating volatility, the appeal of stocks and shares ISAs remains strong compared to traditional cash ISAs. The average stocks and shares ISA now exceeds £65,000, contrasting sharply with the typical cash ISA, which holds under £13,500.
The Case for Stocks and Shares ISAs
Dan Moczulski, managing director of eToro UK, emphasises the long-term benefits of investing in stocks and shares ISAs. “With UK inflation elevated at around 3% over the past year, it’s not a great time to be sitting on cash,” he explains. Over the last year, stocks and shares ISAs have yielded an average return of approximately 11%, significantly outpacing the meagre 3.48% return typical of cash ISAs. As the new allowance of £20,000 per person takes effect, experts have shared their top fund selections for potential investors.
Expert Fund Selections for 2026
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 trust invests in a mix of innovative private firms, such as SpaceX and Revolut, alongside established public companies like Meta, Nvidia, and ASML. Currently trading at a 5% discount and carrying a low fee of 0.31%, this fund has delivered impressive returns, appreciating by 27% over the past year and 68% over five years. It is well-suited for investors with a high-risk appetite who are looking for exposure to companies that are shaping future industries.
iShares Over 15 Years Gilts Index Fund (UK)
Alan Miller, Chief Investment Officer at SCM Direct, points to the iShares Over 15 Years Gilts Index Fund as an opportunity often overlooked by investors. This fund tracks the FTSE Actuaries UK Conventional Gilts Over 15 Years Index, focusing solely on sterling-denominated UK government bonds with a minimum maturity of 15 years. With net assets of £2.95 billion and a commendable Morningstar Gold medal rating, it features a negligible annual fee of just 0.1%. Miller highlights the attractive yield of nearly 5%, stating, “Locking in a yield to maturity of nearly 5% inside an ISA wrapper, where all income and gains are tax-free, is exceptional by historical standards.”
Man Income Fund
Paul Agnell, head of investment research at AJ Bell, endorses the Man Income fund for its strategic approach to undervalued UK companies across various market capitalisations. The fund’s managers actively seek firms exhibiting strong cash flows and assets, aiming to avoid value traps. With a strong performance in early 2026—up over 10% in the first two months and concluding 2025 with a 28% gain—this fund has benefitted significantly from the banking sector. Its management fee stands at 0.9%, making it a competitive option for income-focused investors.
Murray International
Philippa Maffioli of Blyth-Richmond Investment Managers recommends the Murray International fund for its balanced approach to global diversification and income generation, boasting a yield of around 3.5%. Maffioli appreciates the fund’s focus on sustainable cash flows and sensible valuations, rather than merely pursuing the highest yields. Managed by Martin Connaghan and Samantha Fitzpatrick, the fund has returned 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, introduces Pantheon Infrastructure Plc as a compelling choice for those seeking diversification away from traditional stock markets. This FTSE 250 trust co-invests with leading infrastructure managers, focusing on critical assets such as data centres and renewable energy. With shares currently trading at a 13% discount to net asset value, Moyes notes, “These assets are prized for their mission-critical nature and long-term contracted revenue streams.” This high-risk investment has seen a 30% increase over the last year.
Conclusion: The Importance of Diversification
As the landscape of investment continues to evolve, the insights provided by these experts underscore the significance of diversification and strategic asset allocation within ISAs. In a climate where inflation persists and market fluctuations are common, investing in a mix of equities, bonds, and alternative assets can help mitigate risk and enhance potential returns.
The choices made today could prove pivotal for long-term financial health, particularly as tax-free growth opportunities within ISAs are maximised. Engaging with these expert recommendations can empower investors to navigate the complexities of the market, ensuring that their portfolios are both resilient and capable of achieving sustainable growth.
