As the new tax year begins, savvy investors are eyeing their Individual Savings Accounts (ISAs) to maximise returns in a fluctuating market. With the allowance set at £20,000 per individual, the focus shifts to finding the best funds that offer not just growth but also diversification. Experts from the financial sector have identified standout investment options that appeal to both cautious investors and those willing to embrace higher risk for potentially greater rewards.
Stocks and Shares vs Cash ISAs: A Comparative Analysis
With current inflation rates hovering around 3%, keeping savings in cash ISAs may not be the wisest choice. The average stocks and shares ISA has seen substantial growth, boasting an average value exceeding £65,000 compared to less than £13,500 for typical cash ISAs. Dan Moczulski, Managing Director at eToro UK, highlights that in the past year, stocks and shares ISAs appreciated by approximately 11%, while cash ISAs offered a mere 3.48% return. For long-term investors, the tax-free growth potential of stocks and shares ISAs presents a compelling case for investment.
Expert Recommendations for 2026
As part of our exploration into the best funds for the upcoming tax year, we consulted five financial experts, each of whom provided insights into one fund they would personally invest in. Here’s a breakdown of their top picks:
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 focuses on global innovators, investing in a mix of private firms like SpaceX and public heavyweights such as Meta and Nvidia. Currently trading at a 5% discount, the fund has demonstrated robust performance with a 27% increase over the last year, and an impressive 68% rise over five years. Brodie-Smith notes that this trust is designed for long-term investors with a high-risk appetite.
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. This fund is exclusively invested in UK government bonds, offering a low annual charge of 0.1%. Miller describes UK government bonds as an underappreciated opportunity, citing a historical yield of 4.95% compounded over ten years. With current gilt yields nearing multi-decade highs, locking in such rates within an ISA is an attractive prospect for risk-averse investors.
Man Income Fund
Paul Agnell, Head of Investment Research at AJ Bell, highlights the Man Income Fund, which focuses on undervalued UK companies that generate reliable cash flows. The fund has made a strong start to 2026, climbing over 10% in the first two months and finishing 2025 with a 28% gain. Agnell emphasises that the fund’s managers are adept at identifying stocks that are undervalued yet financially sound, particularly within the banking sector.
Murray International
Philippa Maffioli from Blyth-Richmond Investment Managers endorses Murray International for its global diversification and consistent income stream. With a yield of approximately 3.5%, Maffioli appreciates the fund’s commitment to sensible valuations rather than merely chasing high yields. The fund has gained 36% in the past year and 60% over five years, making it a strong contender for those looking for sustainable income and growth.
Pantheon Infrastructure Plc
Jonathan Moyes, Head of Investment Research at Wealth Club, recommends Pantheon Infrastructure Plc for investors seeking exposure to essential global infrastructure assets. The fund co-invests with leading managers in sectors like renewable energy and data centres. Currently trading at a 13% discount to net asset value, Moyes sees this as a unique opportunity, although he cautions that investors should consider the high-risk nature of this investment. The fund has shown a 30% increase in the past year.
Considerations for Investors
As you weigh your options, it’s crucial to keep in mind that investing comes with risks, and past performance does not guarantee future results. Factors such as market volatility and economic shifts can significantly impact returns. Investors should also be aware of any share dealing costs associated with their investment platform, as these can eat into long-term gains.
Why it Matters
The choices made in this tax year could have lasting implications on your financial future. By considering these expert-recommended funds, investors can position themselves to potentially benefit from higher returns while diversifying their portfolios. In an economic landscape marked by uncertainty, these insights offer valuable guidance for navigating the complexities of investment, ensuring that your ISA is not just a cash holding, but a vehicle for growth and financial prosperity.