With ISA season coming to an end in less than two weeks, investors are running out of time to make the most of this year’s £20,000 ISA allowance before it expires. Perhaps you are looking to make some last-minute additions to your portfolio.
If income is your primary goal, Adrian Lowcock, head of personal investing at Willis Owen, has a few suggestions regarding where you should look to invest.
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ISA season: where investors should look to invest
It’s been a turbulent year for global markets because of Covid-19. But thanks to the successful roll-out of the vaccine in the UK, investor confidence is returning. In turn, this is providing a boost to income funds.
As a result, Adrian believes that the UK is one of the places that investors who are looking for income should consider investing.
Another region he sees as having high upside potential for income investors is Asia.
Adrian has identified three specific income funds, two in the UK and one in Asia, that he believes can provide investors with sustainable income as the ISA season comes to a close.
1.Threadneedle UK Equity Income
This fund, managed by seasoned fund manager Richard Colwell, seeks to provide investors with a consistent income stream as well as long-term capital growth opportunities.
Blue-chip companies account for the bulk of the fund’s portfolio. However, as Adrian points out, Colwell will periodically “take large sector bets against the index,” such as out-of-favour companies with turnaround potential, as he seeks to boost investors’ value.
2. Schroder Asian Income
Richard Sennitt, the manager of this Asian fund, has more than 20 years’ experience in Asian markets. Sennitt uses 40 analysts based in the region to assist him.
Stock selection is central to the manager’s investment approach. Shares in the fund are only chosen if they meet certain criteria. The emphasis is on high-quality businesses that can maintain and grow dividends.
In a nutshell, you can rest assured that your capital is being invested in carefully selected, high-quality businesses that will continue to generate a healthy return over time.
3. Man GLG Income Fund
The Man GLG Income Fund adopts a value-driven approach to investing.
Fund manager Henry Dixon focuses on finding value in parts of the income market that others might ignore. This includes “companies trading below his team’s estimate of asset value, or those where the company’s profit stream is undervalued relative to the cost of capital”.
Other key factors considered when selecting shares to include in the fund include quality and positive earnings momentum.
Common sense moves
As you can see, all of these funds have one thing in common. They all focus on identifying companies that can increase shareholders’ value over time while also providing a steady income.
As part of a long-term investing strategy, it makes a lot of sense to consider them for your ISA.
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Benefits of a stocks and shares ISA
The main perk of investing through a stocks and shares ISA is that it has a tax-free wrapper. So if you invest in any of the mentioned funds, you won’t pay tax on the income your investment generates. You’ll also not have to pay capital gains tax on the overall growth of your investment.
It’s never too late to open a stocks and shares ISA if you haven’t already. Check out our list of stocks and shares ISA providers to get started.
Make sure you do your own research before you part with your money. And don’t forget that investing comes with inherent risk. You could get back less than you invest.
If you’re unsure about the suitability of an investment for your own circumstances, consider seeking financial advice first.
