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Expert Tips on the Best Cautious Last Minute ISA Lump Sum Investments

written by Bella Palmer

As we keep saying, the ISA deadline is looming and we now have around two weeks to go until the annual £20,000 tax haven allowance is reset and any unused portion lost. The SIPP deadline is the same but with three years of unused allowance able to be rolled over, that situation is not quite so pressing. For those investing online into a stocks and shares ISA and planning on dropping a lump sum in before the April 4th, you might be wondering what investments to allocate it to. It may well be that you already have your investment portfolio nicely set up and will just sprinkle any lump sum payment across topping up additional holdings. However, if you are looking for ideas, industry experts have some top tips worth considering:

If you are a more conservative investor and your priority is preserving your savings rather than growing them, the stock market can still be an option. Adrian Lowcock, who works for fund platform Architas, suggests more conservative UK equity income funds. Income stocks that this kind of fund invests in are usually in sectors such as consumer staples, telecoms and utilities. These stocks don’t typically see strong capital gains when markets are buoyant but are also resilient during a downturn because even in a weak economy we still need to eat, we still make phone calls, browse the internet and watch TV and we still need power and water at home. He offers up the Fidelity Moneybuilder Dividend fund as a good example of a defensive income fund.

Another option is absolute income funds, that spread their holdings across asset classes such as income equities, property and bonds. These focus on global macro trends and aim to deliver the same returns every year regardless of market conditions. This does mean returns are modest as the focus is capital preservation but should still be better than the interest rates offered by cash ISAs. He offers up JPM Global Macro Opportunities as a good example of this kind of fund.

Chase de Vere financial advisor Patrick Connolly’s tips for capital preservation focused funds are Troy Trojan and Investec Cautious Managed. The former invests in internationally diversified defensive equities, index-linked government bonds, gold and cash. The latter is a little more adventurous and invests half its capital under management in assets it believes offer the potential for gains and the other half in those that offer protection in the event of a downturn.

Bonds are also favoured by cautious investors and Martin Bamford of financial advisory firm Informed Choice thinks that the Baillie Gifford High Yield Corporate Bond and AXA Global High Income funds are good options. These are both high yield international bond funds. He thinks rising interest rates make fixed income assets riskier than they have been in a while and why he is not currently a fan of gilts and investment-grade corporate bonds.


This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

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