As the 2026 tax year kicks off, financial experts are urging investors to reconsider their approach to Individual Savings Accounts (ISAs). With the annual allowance set at £20,000 per person, the focus is shifting towards funds that promise better returns amid a backdrop of fluctuating stock markets and rising inflation. This article examines the recommendations from five seasoned professionals, each highlighting a fund they believe is worth considering for the year ahead.
The Case for Stocks and Shares ISAs
Investors have faced a rollercoaster ride in the stock market recently, leading many to hesitate about diversifying their portfolios. However, seasoned investors know that a stocks and shares ISA often outperforms cash ISAs over the long term.
Dan Moczulski, Managing Director at eToro UK, points out that the average stocks and shares ISA has ballooned to over £65,000, vastly surpassing the £13,500 typically held in cash ISAs. With UK inflation hovering around 3%, staying in cash is becoming less appealing, especially since stocks and shares ISAs yielded an average return of 11% over the past year, in stark contrast to the mere 3.48% from cash ISAs.
Expert Recommendations for 2026
With the new tax year in play, we turned to financial experts for their top fund picks to consider for your ISA investments. Here’s what they had to say:
Scottish Mortgage FTSE 100
Annabel Brodie-Smith, Communications Director at the Association of Investment Companies, champions the Scottish Mortgage FTSE 100 investment trust, managed by Baillie Gifford. This fund takes a global approach, investing in innovative private firms like SpaceX and Revolut alongside renowned public companies such as Meta and Nvidia.
Currently trading at a 5% discount and with low fees of just 0.31%, this trust appeals to long-term investors who can tolerate higher risk. It has shown impressive growth, increasing by 27% in the last year and 68% over the past 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 solely on UK government bonds with a maturity of at least 15 years. With net assets of £2.95 billion and an ongoing charge of only 0.1%, this fund is designed for investors seeking stability.
Miller highlights the current gilt yields as particularly advantageous, noting that an investment could yield nearly 5% compounded over a decade. “Boring has rarely looked this good,” he states, asserting that this fund offers a secure investment backed by the UK government, all within a tax-free ISA wrapper.
Man Income Fund
Paul Agnell, Head of Investment Research at AJ Bell, recommends the Man Income fund, which focuses on undervalued UK companies with strong cash flow. The management team aims to identify firms that are not only trading below their replacement costs but also demonstrating the ability to generate profit.
This fund has witnessed a robust start to 2026, gaining over 10% in the first two months and an impressive 28% throughout 2025, largely driven by significant contributions from major banks. With a management fee of 0.9%, it presents a compelling option for those looking for income generation.
Murray International
Philippa Maffioli from Blyth-Richmond Investment Managers advocates for Murray International, which aims to provide both global diversification and a reliable income stream, currently yielding around 3.5%. She appreciates the fund’s focus on sustainable cashflows rather than chasing high yields, reducing exposure to the UK market.
Managed by Martin Connaghan and Samantha Fitzpatrick, this fund has also performed well, with returns of 36% in the past year and 60% over the last five years, all while maintaining a competitive fee of 0.5%.
Pantheon Infrastructure Plc
Lastly, Jonathan Moyes, Head of Investment Research at Wealth Club, highlights Pantheon Infrastructure Plc, a fund that diversifies away from traditional stock markets. This investment trust co-invests in critical infrastructure projects, including renewable energy and large-scale data centres.
Moyes notes that shares are currently trading at a 13% discount to their net asset value, presenting a potential opportunity for investors. However, he cautions that this is a high-risk investment, suitable for those wanting to add a layer of diversification to their portfolio, with total ongoing charges of 1.29%.
Why it Matters
As the new tax year unfolds, the insights from these financial experts underscore the importance of strategic investing in an uncertain economic climate. With inflation impacting cash holdings and stock markets exhibiting volatility, exploring diversified fund options within ISAs can provide a pathway to better financial growth. By aligning portfolios with these expert recommendations, investors may harness the potential for higher returns while navigating the complexities of 2026’s financial landscape.
