Last minute investing ideas for your Isa: A bumper 22 tips from top experts

Many investors will be casting around for new ideas on funds, trusts and stocks with high performance potential for their Isa as the deadline looms.

Whether you are starting from scratch, have an established strategy in place, or are looking to fine tune or reshape your portfolio, we have rounded up tips for a huge variety of themes, styles and opportunities.

That includes thinking about how you will adjust to moderating inflation and a likely run of interest rate cuts by central banks this year and beyond.

Isa investing strategy: Are you pursuing cheap valuations, seeking opportunities ahead of interest rate cuts, or looking to do good in the world?

Investors need to consider how best to enhance what’s already in their portfolios, according to Dan Coatsworth, investment analyst at AJ Bell.

‘Someone with a global tracker fund might add a UK smaller company fund if they share the view that small caps have been unloved for several years and could bounce back once interest rates start to be cut,’ he suggests.

‘Another person looking for income-generating investments might explore opportunities with a UK fund because yields are often greater than you find in other parts of the world and valuations cheaper.’

Value: Investors will need to hold their nerve

‘Value investing means looking for stocks trading below what they think a company is really worth,’ says Coatsworth.

‘Sometimes a fund manager will look for both value and growth, essentially meaning they want to pick companies whose valuation is fair or cheap and capable of delivering good earnings growth. This is often referred to as a GARP or ‘growth at a reasonable price’ strategy.’

He says investors will need to hold their nerve because it can take a long time for the market to recognise a successful turnaround story or special situation – but rewards can be spectacular.

He tips… Temple Bar [Ongoing charge: 0.92 per cent]

The managers often hold stocks that the average person might think to be broken businesses or ones that have lost their way. They pick stocks where they think the market hasn’t recognised the true value in the business. 

This might be owning a division that could potentially be worth more than the market value of the entire group or where the market is simply being too pessimistic. Names currently in the portfolio include Shell, NatWest and Marks & Spencer.

Fidelity Special Values [Ongoing charge: 0.70 per cent]

Another contrarian investment vehicle, owning shares in unloved companies which in the managers’ view have the potential to change. 

It invests when sentiment is poor and sells once the market has recognised the turnaround and investors are buying into the growth story.

Growth: ‘Blue sky’ and earthbound opportunities

‘There is a misconception that growth investing is about backing start-ups with bright ideas and no sales or profits.’ says Coatsworth.

‘These so-called “blue sky” situations can feature in growth portfolios, but they tend to be the minority.’

He says you’re more likely to find portfolios featuring profitable companies with big opportunities to grow earnings and market share, or less mature ones that have commercialised an idea but are still in the early growth stages.

He tips… Liontrust UK Growth [Ongoing charge: 0.82 per cent]

The aim is to beat the UK market, as measured by the FTSE All-Share index. The managers look for companies that have a competitive advantage such as through intellectual property, recurring revenue or strong distribution networks. 

Dan Coatsworth: It can take a long time for the market to recognise a successful turnaround story or special situation – but rewards can be spectacular

The fund has a bias towards companies with quality characteristics. Portfolio names include pharma giant GSK and defence group BAE Systems.

Chrysalis Investments [Ongoing charge: 0.89 per cent]

Many investment trusts invest in privately-owned companies as well as those trading on a stock market. 

These ‘unquoted’ business are often less than 10 or 15 years old and are disrupting industries that have been dominated by the same names for decades. As such, it is common to see rapid sales growth as they grab market share as consumers or businesses seek a fresh alternative to the status quo.

Chrysalis Investments’ portfolio includes stakes in UK firms Starling Bank, marketing specialist The Brandtech Group and Featurespace, which uses software to help in the fight against fraud and financial crime, plus Swedish buy now, pay later giant Klarna.

UK income: For retirees needing to pay the bills

‘Income funds and trusts tend to have a value bias because generous dividends are often found in mature companies that trade on cheap valuations due to having lower growth rates,’ says Coatsworth.

‘The UK market is blessed with lots of income opportunities, many of which pay higher dividend yields than you might find in other geographies such as the US. That is music to the ears of people in retirement who might be reliant on their investments to generate an income to pay the bills.’

He says many UK equity income funds are concentrated in banking, oil and life insurance stocks sectors, where generous dividends are offered to attract investors because earnings growth is low or unpredictable.

He tips… City of London Investment Trust [Ongoing charge: 0.65 per cent]

The trust blends value and income styles and its 0.37 per cent annual management charge is among the lowest in the UK equity income space. A 5 per cent yield is higher than the FTSE 100 which offers 3.9 per cent.

Darius McDermott: Investors have the opportunity to lock in historically high income yields – then benefit from capital appreciation after rate cuts

High yield opportunities: Lock in income ahead of rate cuts

‘Today, thanks to rising interest rates, yields on investment-grade corporate bonds sit at their highest levels in years,’ says Darius McDermott, managing director at Chelsea Financial Services. 

‘Investors have the opportunity to lock in these historically high yields and earn an attractive income in their Isa for the foreseeable future – and potentially benefit from capital appreciation with the possibility of a rate cut in 2024. 

‘Furthermore, should we see the trillions of assets in money market funds shift back into bonds as rates fall, the value of fixed income assets could increase further.’

McDermott adds that Real Estate Investment Trusts (REITs) are another sector sensitive to interest rates, which is why the asset class is down over 20 per cent, with some trusts suffering even more acute losses. 

‘With the prospect of rates falling, we believe there is now an attractive entry point into the sector.’ 

He tips… Liontrust Sustainable Future Monthly Income [Ongoing charge: 0.56 per cent]

Royal London Corporate Bond [Ongoing charge: 0.56 per cent]

Cohen & Steers European Real Estate Securities [Ongoing charge: 0.65 per cent]

TR Property Investment Trust [Ongoing charge: 0.84 per cent]

Interest rate cuts: Stocks that could get a significant boost

Inflation coolled to 3.4 per cent in February, interest rates were held at 5.25 per cent, and there were no votes for an increase among the members of the Bank of England’s monetary policy committee for the first time since September 2021, notes wealth manager RBC Brewin Dolphin.

Senior investment manager Rob Burgeman reckons some sectors could be in line for a significant boost.

Rob Burgeman: Commercial property, housebuilders and retail stocks could benefit from rate cuts

So-called ‘growth’ companies that can outperform the market because of their future potential have fallen out of favour in a big way, and some more traditional areas of the market with prospects closely linked to the direction of interest rates have suffered too, he points out.

Burgeman singles out commercial property, housebuilders and retail stocks as having potential to benefit from rate cuts.

He tips… Primary Health Properties

There are some perfectly good companies in the property sector which have been unfairly lumped together with their peers. is an investment trust that invests in healthcare facilities, such as GP surgeries. Two years ago the trust yielded around 4 per cent, but now it yields 7.23 per cent.

Persimmon

Long seen as the blue-chip choice in the sector, it has cut its dividend hard on the back of slowing sales, but still yields more than 4.5 per cent and trades on a relatively attractive forecast price-to-earnings ration of 15.8 times.

Berkeley Group

Another quality name, which is more focused on mixed-use developments. It has never been a great yielder, but still offers around 2 per cent and trades on a forecast price-to-earnings of 13 times.

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The clothing chain continues to buck the trend in the retail sector, and has even scooped up some of the brands that have gone to the wall over the course of the last few years, such as Made.com. Its recently released 2023 results said the company is more optimistic than it has been for some time, which suggests there is plenty of room for growth ahead.

Ethical: Looking to do good with a long term performer

Some investors have strong views about the type of companies they do and do not want to invest in, notes Dan Coatsworth of AJ Bell.

If you are concern to invest in a way that benefits society, he suggests a fund that has outperformed the FTSE All-Share index of UK companies over three, five and 10 years.

 ‘Past performance is not a guide to future performance but looking back over history can help to spot funds or trusts that have demonstrated stamina and prowess.

‘It’s important to look over a long period such as 10 years to separate those which have skills versus those which might have just got lucky over the short term.’

He tips… Royal London Sustainable Leaders [Ongoing charge: 0.61 per cent]

It focuses on companies that have a net positive benefit on society via their products and services or in the way they do business. What you don’t get is exposure to activities such as nuclear power, weapons manufacturing or animal testing for non-medical purposes. Some of the key holdings include AstraZeneca, London Stock Exchange and Compass

It has made a total return in sterling of 26 per cent over three years, versus the FTSE All-Share at 22 per cent. Over five years it has returned 54 per cent, versus the index at 29 per cent. Over 10 years, it has made 137 per cent versus the index at 72 per cent.

Large and medium companies: Best ideas from the FTSE 350

Coatsworth picks out a fund with a ‘cream of the crop’ portfolio, and which like Royal London Sustainable Leaders has outperformed the market.

He tips… Artemis UK Select [Ongoing charge: 0.55 per cent]

About three quarters of the fund is held in large UK companies and the majority of the rest in medium-sized businesses. The manager has a simple premise: find companies that could get a lot bigger over time and then whittle down the selection based on a corporate’s health and prospects.

The portfolio includes quite a few banks and oil companies like Barclays and Shell, while the industrials sector is also a favourite hunting ground. The fund can bet against or ‘short’ companies it thinks will struggle.

Smaller companies: Ready for a comeback in a recovering market

‘Small caps are known for being more volatile than their larger-cap peers but, across longer periods they tend to outperform them – particularly in a recovering market,’ says Darius McDermott of Chelsea Financial Services. 

‘Small cap valuations have become unquestionably cheap, and that’s not just our opinion.

‘Savvy private equity buyers are taking the opportunity to takeover high-quality British businesses on the cheap, and we believe it won’t be long before the wider market catches on and small caps stage a recovery. ‘

He tips.. The Global Smaller Companies Trust [Ongoing charge: 0.94 per cent]

TM Tellworth UK Smaller Companies [Ongoing charge: 0.95 per cent]

 Liontrust UK Micro Cap [Ongoing charge: 1.34 per cent]

Janus Henderson European Smaller Companies [Ongoing charge: 0.87 per cent]

Jupiter European Smaller Companies [Ongoing charge: 0.99 per cent]

Asia: Cheap opportunities in a diverse region

‘China’s domination of the Asia Ex-Japan benchmark has meant the country’s recent macroeconomic and geopolitical woes have dampened sentiment across the region, creating opportunities for fund managers to extract value,’ says McDermott.

He suggests investors consider two distinct but complementary portfolio approaches for exposure to Asia – India for aggressive growth and China for a value play.

‘While it is important to understand the risks, we also see significant upside potential in Chinese equities. Despite housing some of the world’s leading companies like Tencent and Alibaba, Chinese equities are currently attractively valued. 

‘This undervaluation can be attributed to a combination of economic slowdown and geopolitical tensions.

‘On the other end of the spectrum, India is shining bright amidst a global slowdown and a top performer in Asian portfolios, reflecting its rapid economic expansion.’

He tips… FSSA All China [Ongoing charge: 0.70 per cent]

While China may require more patience from investors due to potential volatility, investing in undervalued assets with solid fundamentals offers the potential for significant long-term returns  This fund is a firm favourite of ours in this specialist area.

UTI India Dynamic Equity [Ongoing charge: 1.00 per cent]

A strong contender in this space, offering exposure across the market-cap spectrum. India’s aggressive growth potential can act as a counterweight to any stagnation in China’s maturing economy. Conversely, China’s value proposition offers a hedge against potential downward corrections in India’s potentially overheated market.

This post first appeared on Dailymail.co.uk