Where the experts are investing their Isa money

Telegraph

24-03-2025

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As the Isa deadline rattles ever nearer, many of us will be considering where to put our capital to work. This can be an extremely daunting prospect. Markets are volatile, bonds have let us down and cash is only eroded by inflation.
Indecision can be our biggest enemy when it comes to taking advantage of our Isas – the options are endless and we can find ourselves frozen in place year after year, letting our tax-free allowance go to waste.
There are no shortage of investing experts giving their views on where you should put your Isa – but are they putting their own money where their mouths are? They reveal their strategies below:
Helena Morrissey, former fund manager, City grandee and Telegraph Money columnist
Last year I split my Isa allowance between broad-based US and UK equities; despite all the noise, the returns have been similar, but now I feel cautious about US large cap stocks for a few reasons.
Tariffs aren't really one of them, given that the US economy is much more internal than ours. Just 14pc of US GDP relates to imports, and 11pc to exports, compared with the UK's 33pc and 31pc figures. But the US market has become extraordinarily concentrated, with few stocks outperforming the market over the past two years.
So, this year I'm investing a third of my Isa in the Brown Advisory US Smaller Companies Fund to take advantage of the historically low valuations of these small companies (an actively managed fund is critical when navigating more volatile smaller firms).
Another third will be invested in actively managed emerging market equities – the next big global growth story. I like the top-down approach taken by the managers of the JOHCM Global Emerging Market Opportunities Fund.
My final third will be kept here in the UK, where I'll go for a FTSE 100 tracker fund. Labour has been disastrous for the British economy but the stock market is driven by many factors. I remain hopeful that the Government will overhaul the Isa regime to encourage an investing culture here, something we badly need.
Laith Khalaf, head of investment analysis at stockbroker AJ Bell
I'm still of the opinion that the UK looks good value despite plenty of hand wringing about the state of the London Stock Exchange. These things are cyclical, and sometimes there aren't many revolutions per minute, so patience is necessary.
I like the Fidelity Special Values Trust because it's run by a long-standing contrarian manager who invests in companies of all sizes. I also want to lock into the long-term growth potential of smaller companies, so I'll probably top up existing holdings in Artemis UK Smaller Companies and Aberforth Smaller Companies Trust.
I don't want to totally turn my back on the US and the global stock market, so I'll put some of my Isa into Fundsmith Equity, as I view Terry Smith as a safe pair of hands – his fund has been outperformed by the MSCI World Index in recent years, but to be honest, what hasn't?
I may well leave up to half of my Isa money in the BlackRock Sterling Liquidity Premier Fund, a cash-like money market fund. The money parked in there will give me another bite at investing in the markets later this year.
Nick Train, a fund manager running £13bn for investors
As every year, I will invest my Isa into shares of Finsbury Growth & Income Trust, the trust I have managed for nearly 25 years.
Three reasons: First, I feel an obligation to invest alongside other shareholders. It's right I should eat my own cooking.
Next, investment trusts are great Isa vehicles – typically you access the underlying investments at a discount to market value.
Last, Finsbury is invested in UK companies. Recent disenchantment with the London stock market has left the shares of many world-class UK companies trading at attractive valuations. We own a lot of them. I expect my growing holding will be a rewarding investment.
Gavin Lumsden, freelance journalist and investment trust expert
With US-led global stock markets looking wobbly, I'm picking two UK-focused investment companies.
Share prices in the sector are in a slump so my first choice is Achilles Investment Company, a recently launched £56m activist fund targeting distressed infrastructure and real estate investment trusts. The management has a good track record in shaking up Hipgnosis Songs, a music royalty fund, and PRS Reit, a property fund. Its first target Urban Logistics, a fund investing in warehouses, shot up in value when Achilles disclosed a stake, so I have hopes of more to come.
My second choice is Aurora UK Alpha, a £274m investment trust trading on a 10pc discount to asset value, offering a cheap way to access a continued recovery in the UK stock market. I like the in-depth research the fund managers do on their tight portfolio of undervalued stocks which include undertakers Dignity, Lloyds Bank and builder Barratt Redrow.
Robert Stephens, equity analyst and Questor columnist
Despite recent stock market turbulence, it is a case of business as usual regarding my Isa investing plans. Namely, all deposits into my Isa will be invested in shares, rather than being held as cash, due to their far superior long-term track record of performance.
Indeed, beyond its use for emergencies and to provide peace of mind, cash offers relatively little investment potential in my view – and with interest rates widely expected to fall over the coming months, its appeal is likely to further deteriorate.
As for what I plan to buy, the US stock market's recent slump makes it too tempting to ignore on a long-term view.
In the past I've loved investing in individual stocks – and of course recommend them every week in Questor – but regulations at work have made that untenable today. Therefore, I am likely to add to my existing Isa holdings in the next best thing – S&P 500 tracker funds provided by Vanguard, iShares and HSBC. They offer broad exposure to the US economy and I have found them to be a simple, cost-effective means of diversifying my Isa.
Certainly, the stock market could fall further in the short run, but as a long-term investor I am wholly unconcerned about how share prices perform over a matter of months. In fact, a falling stock market is likely to prompt me to buy more shares rather than retreat into cash.