As the 2026 tax year kicks off, savvy investors are turning their attention to the best options for their Individual Savings Accounts (ISAs). With the allowance now set at £20,000 per person, experts are recommending a diverse array of funds that promise to enhance your portfolio beyond traditional cash savings. Recent market trends suggest that investing in stocks and shares ISAs is likely to yield better long-term returns compared to cash ISAs, especially in the context of rising inflation.
The Case for Stocks and Shares ISAs
The current financial landscape is characterised by volatility, making some cautious about venturing into stock investments. However, those willing to adopt a long-term view are likely to see more substantial growth. The average stocks and shares ISA is currently valued at over £65,000, significantly outpacing the typical cash ISA, which averages around £13,500. Dan Moczulski, managing director at eToro UK, highlights the disparity, noting that while cash ISAs returned an average of just 3.48% over the past year, stocks and shares ISAs soared by approximately 11%.
In light of these figures, we consulted five financial specialists who each selected a fund they personally endorse for investment this tax year. While these suggestions might not suit every investor’s needs, they provide valuable insights into potential opportunities for diversification and risk management.
Expert Fund Selections
Scottish Mortgage Investment Trust
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 is known for its forward-thinking investments in both private ventures like SpaceX and established giants such as Meta and Nvidia. Currently trading at a 5% discount with a low fee of just 0.31%, this trust is geared towards risk-tolerant investors seeking long-term gains. Over the past year, it reported an impressive 27% increase, with a remarkable 68% growth over a five-year period.
iShares Over 15 Years Gilts Index Fund
Alan Miller, Chief Investment Officer at SCM Direct, recommends the iShares Over 15 Years Gilts Index Fund, which focuses exclusively on sterling-denominated UK government bonds. With a modest annual charge of 0.1% and no performance fees, this fund offers an enticing yield of nearly 5%—an attractive proposition for risk-averse investors. Miller points out that many overlook the potential of UK government bonds, which can provide a robust return, especially in the current environment of rising interest rates. While it has remained relatively flat over the past year, its stability and tax efficiency make it a compelling choice.
Man Income Fund
Paul Agnell, head of investment research at AJ Bell, highlights the Man Income fund, which targets undervalued UK companies offering competitive yields. The fund’s managers employ a thorough analytical approach, focusing on firms with strong cashflows and assets to avoid value traps. With a charge of 0.9%, this fund has had a strong start to 2026, up over 10% in just two months. Its performance in 2025 was bolstered by significant contributions from banks like Lloyds and Barclays, highlighting the potential for growth within the UK market.
Murray International Fund
Philippa Maffioli of Blyth-Richmond Investment Managers recommends the Murray International Fund, which prioritises global diversification while maintaining a steady income stream with a yield of around 3.5%. The fund focuses on sustainable income and sensible valuations rather than chasing the highest yields, making it a robust option for long-term investors. With a fee of 0.5%, it has performed well, achieving a 36% increase over the past year and a 60% rise over five years.
Pantheon Infrastructure Plc
Jonathan Moyes, head of investment research at Wealth Club, suggests Pantheon Infrastructure Plc, which provides an alternative to traditional stock market investments by focusing on infrastructure assets. This fund, which co-invests with leading infrastructure managers, covers a diverse portfolio that includes renewable energy and essential services. Despite being a high-risk investment, it trades at a 13% discount to net asset value, presenting potential upside for investors. The fund has grown by 30% in the past year but is still relatively new, making long-term performance difficult to gauge.
Why it Matters
Navigating the complexities of today’s market can be daunting, particularly for those new to investing. However, with inflation affecting purchasing power and cash savings yielding low returns, exploring diversified investment options within ISAs is increasingly vital. The recommendations from these financial experts underscore the importance of strategic investment in stocks, bonds, and infrastructure to foster long-term financial growth. By considering these funds, investors position themselves to potentially reap significant rewards while managing risk in an unpredictable economic climate.
