An ISA (Individual Savings Account) lets UK residents save or invest £20,000 each year without paying tax on any interest or investment income.
With a Lifetime ISA (LISA) you can invest up to £4,000 and the government will add a 25 per cent bonus to your savings, up to a maximum of £1,000 per year (you need to be aged between 18 and 39 to open a LISA). The £4,000 will count towards your ISA allowance.
It can be helpful to think of a Stocks and Shares ISA or LISA as a shopping basket and you get to choose which funds to put into it. Subscriptions for this year’s tax-free ISA allowance must be made before the end of this tax year (midnight on 5 April, 2023). Investments can be transferred from one fund into another and you can switch platforms too.
Using an ISA is a great way to invest and not have to pay tax on the gains made in any given year. Excitingly, it’s also possible for your ISA investments to match your hopes for the future of the planet.
However, with seemingly endless opportunities to invest your allowance, it can be hard to know which fund or funds to pick. We asked Dzmitry Lipski, Head of Funds Research at interactive investor, which three green funds he likes the look of for your ISA or LISA.
This fund, managed by the highly-regarded Schroder Value team, invests in companies that are well positioned to benefit from a transition to a more sustainable global economy.
Dzmitry says: “It will only invest in those companies that the team identify as undervalued ESG (environmental, social and governance) leaders. This strategy offers customers a value approach that invests in companies that have a positive impact on society and are industry leading.
“As such, the fund would complement other growth oriented, global equity options.”
This fund primarily invests in listed equities (shares in companies) whose main activity or exposure is within the clean energy sector.
Dzmitry says: “The VT Gravis Clean Energy Income Fund is a good option for income investors seeking stable long-term dividend income, low volatility, capital protection and growth. The fund offers exposure to companies that have significant involvement in the clean energy sector such as wind, solar and hydro.
“Fund manager Will Argent has run the fund since its inception in December 2017. More than half of the portfolio is invested in the UK. Among its top holdings are Greencoat UK Wind PLC, Renewables Infrastructure Group Ltd and Clearway Energy Inc. Current yield is almost four per cent.”
The underlying investment philosophy of this fund range is to deliver low cost, actively managed investments that contribute positively to social and environmental issues.
Dzmitry says: “The CT Sustainable Universal MAP range is a one stop, hybrid solution that incorporates actively managed, multi asset and sustainable investing with a focus on low cost. The range is reviewed by an independent Responsible Investment Advisory Council.
“Headed by highly experienced investors Simon Holmes and Paul Niven, the CT Multi-Asset team has a successful long-term track record of producing strong risk adjusted returns in running multi-asset ESG products.”