As the new tax year unfolds, the spotlight is on investment opportunities that can help ISA holders make the most of their £20,000 allowance. With stock markets experiencing significant fluctuations, experts are weighing in on the best funds for long-term growth. Their insights suggest that diversifying your investments could yield better returns compared to traditional cash savings. Here’s what you need to know about the top picks for your ISA in 2026.
The Case for Stocks and Shares ISAs
In an era where inflation hovers around 3%, holding cash in a savings account may not be the wisest choice. Dan Moczulski, managing director of eToro UK, points out that the average stocks and shares ISA has appreciated by approximately 11% over the past year, far surpassing the 3.48% return from cash ISAs. For those new to the world of investing, choosing a stocks and shares ISA could be a more rewarding path, especially considering that all earnings are tax-free.
Moczulski explains, “The average value of a stocks and shares ISA exceeds £65,000, compared to less than £13,500 for cash ISAs. This stark difference highlights the potential benefits of investing over simply saving.”
Top Fund Recommendations from Industry Experts
With the new tax year allowance in place, we consulted five financial experts to identify their top fund choices for ISA investments. While these selections may not suit every investor’s profile, they offer valuable insights into potential avenues for wealth growth.
1. Scottish Mortgage FTSE 100
Annabel Brodie-Smith, communications director at the Association of Investment Companies (AIC), recommends the Scottish Mortgage FTSE 100 investment trust managed by Baillie Gifford. The fund focuses on innovative private companies like SpaceX and Revolut, alongside established names such as Meta and Nvidia.
Brodie-Smith highlights the trust’s 5% discount and low management fees of 0.31%. It has demonstrated impressive performance, with a 27% increase over the past year and a remarkable 68% rise over five years. “This is an ideal choice for long-term investors willing to embrace higher risk for potentially substantial rewards,” she notes.
2. iShares Over 15 Years Gilts Index Fund (UK)
Alan Miller, Chief Investment Officer at SCM Direct, champions the iShares Over 15 Years Gilts Index Fund, which invests exclusively in UK government bonds. With net assets of £2.95 billion and a mere annual charge of 0.1%, this fund offers a compelling opportunity, especially in a climate of rising interest rates.
Miller states, “Locking in a yield to maturity of nearly 5% within an ISA wrapper is exceptional by historical standards.” This fund may not have surged in the past year, but it has appreciated by 9% over five years – a solid performance given the current economic climate.
3. Man Income Fund
Paul Agnell, head of investment research at AJ Bell, points to the Man Income Fund as a strategic choice for value-seeking investors. The fund aims to identify undervalued UK companies across various market capitalisations that offer yields in line with the market average.
Agnell remarks that the fund has begun 2026 strongly, with a 10% rise in just the first two months. Its performance in 2025 was bolstered by banks like Lloyds, Barclays, and Standard Chartered. The fund charges a fee of 0.9% and focuses on sustainable growth through careful selection of cash-generative stocks.
4. Murray International
Philippa Maffioli from Blyth-Richmond Investment Managers advocates for the Murray International fund, which balances global diversification with reliable income generation. Offering a yield of approximately 3.5%, the fund prioritises dependable cash flows over high-yield chasing.
Maffioli explains, “This fund is not confined to the UK market, which helps mitigate risks associated with regional downturns.” With a fee structure of 0.5%, Murray International has experienced a 36% increase over the last year and a remarkable 60% rise over five years.
5. Pantheon Infrastructure Plc
Jonathan Moyes, head of investment research at Wealth Club, highlights Pantheon Infrastructure Plc as a unique option for investors seeking diverse exposure beyond traditional stock markets. The fund co-invests with top infrastructure managers in sectors like renewable energy and large-scale data centres.
With shares currently trading at a 13% discount to net asset value, Moyes notes the potential for gains if this valuation gap narrows. However, he warns of the high-risk nature of this investment, which should complement a well-diversified portfolio. The fund has shown a 30% increase over the past year.
Considerations for Investors
As you contemplate these fund options, remember that investing always carries risks. Depending on your chosen investment platform, share dealing costs may also impact your returns. Therefore, it’s crucial to research and select platforms wisely to optimise your long-term investment outcomes.
Why it Matters
With the 2026 tax year now underway, understanding your investment options is more crucial than ever. The recommendations from these experts provide a roadmap for navigating the complexities of the current market. By considering diversified funds instead of traditional savings, investors have the opportunity not only to protect their wealth against inflation but also to grow it significantly over time. In an unpredictable economic landscape, making informed choices today can lead to greater financial security tomorrow.
