Canny but kind – three ISA picks from Castlefield IFA

Written by John Ditchfield on 13th Mar 2016

With just four weeks left until the end of the tax year, we speak to John Ditchfield, Partner at Castlefield Advisory Partners, to ask where clever ISA investors with a conscience might want to put this year’s ISA allowance.

Individual Savings Accounts or ISAs offer investors and savers a very helpful and simple to use “tax shelter” which means that assets held within an ISA account are exempt from personal income tax and capital gains tax. ISAs are not however exempt from Inheritance Tax, which is worth bearing in mind.

Looking at investment options for this year’s ISA allowance of £15,240 it makes sense to hold assets which play to the strengths of the ISA structure, in that they benefit from the tax reliefs mentioned above by generating income or capital gains.

A good example of this is the ConBrio BEST Income Fund which has a distribution yield (income) of 4.31%; this is the historic dividend yield and cannot be guaranteed on future investments, but still investors should receive a much higher income than cash. The fund has also performed well against products with similar objectives (the Sector) and delivered a five year return of 40.46%1.

Another fund which is worth looking at for ISA investment is the excellent WHEB Sustainability Fund. This fund aims for capital growth through investment into businesses which derive a major part of their income from activities which promote sustainability, for example in clean energy or energy efficiency and healthy lifestyles. By making investments into innovative companies the fund’s managers hope to generate most of the return for investors through long-term growth rather than through generating income, which is good news for ISA investors as gains are exempt from tax.

Investors with a higher tolerance for risk looking to take long-term by and hold strategy should also look at the excellent range of sustainability funds managed by Stewart Investors (formerly First State) as these funds have higher exposure to what is often termed emerging markets, typically these are higher growth economies in South America and Asia. These economic regions have come under a great deal of pressure during 2015 as resource companies have seen their share prices collapse. One of the most highly regarded funds in this area is Stewart Investors Global Emerging Markets Fund managed by David Gait.

1 All figures quoted are from FE Analytics as at 10/03/2016

This is not an offer or a solicitation to make an investment. It does not constitute a personal recommendation and recipients must satisfy themselves that any investment is appropriate in the light of their own understanding, appraisal of risk and reward, objectives, experience and financial and operational resources. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Non independent research is not subject under the Markets in Financial Instruments Directive (“MiFID”) to any prohibition on dealing ahead of the dissemination of investment research.

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