ISA 2019: Where are the Chelsea experts investing this year?

With only two weeks to go until the end of the tax year, time is running for those who are yet to make a decision on what to do with their £20,000 ISA allowance. To get some ideas, we asked the experts at Chelsea how they have positioned their ISAs this tax year and where they believe the opportunities for growth may lie.

Please note that these are personal choices and may not be suitable for your portfolio.

Darius McDermott, managing director

“2018 was not favourable for stock markets and there remain concerns over the global economy, but I believe there are big opportunities in this climate and that is why I am continuing to hold the VT Chelsea Managed Aggressive Growth fund. Almost all of the fund is invested in equities (92%*), with the US (37%*), Europe (17%*) and Asia Pacific ex Japan (16%*) the largest regional holdings.”

“But those opportunities I mentioned also lead me to the UK, where valuations look incredibly cheap given the worries over Brexit. One fund which could take advantage of this is the Investec UK Special Situations fund, managed by Alastair Mundy. This fund is contrarian in nature with Alastair claiming he “looks in other people’s dustbins for ideas”. He cites the Brexit paralysis as an extreme example, which leaves pricing anomalies his team can take advantage of.”

Juliet Schooling Latter, research director

“The core of my portfolio is in the VT Chelsea Balanced Managed fund, and that's were my monthly contributions go. But I always save a bit of my allowance so that I can add a satellite choice or two to the fringes of my portfolio.

“One fund I like at the moment is Baillie Gifford Global Discovery, managed by Douglas Brodie. This fund has the flexibility to search for those small and mid-cap companies which can become the large-caps of the future. The team targets less mature firms servicing global markets, and typically has a strong focus on innovation, resulting in a preference for healthcare and technology stocks.

“Typically I will also have a bit of regional exposure on the side. This year I think Europe offers value, but I want a manager with experience in this environment, so I’ve gone for Jupiter European.”

James Yardley, senior research analyst

“I am somewhat of a pessimist at heart, so the VT Chelsea Managed Cautious fund is my main choice for my ISA portfolio this year. We have been noticing value opportunities and the team has been adding into names like Jupiter UK Special Situations and Investec Global Special Situations inside the fund to take advantage of that. A few of our absolute return funds have also been added in the midst of all the uncertainty.

“One fund I like in the cautious portfolio at present is the Fidelity Asia Pacific Opportunities. Manager Anthony Srom’s high conviction and disciplined approach helps this fund to stand out from his peers. The fund is very impressive given it is concentrated in only 25-35 stocks, yet Anthony prides himself on it having lower than average volatility.”

Ryan Lightfoot-Brown, senior research analyst

“I have been adding to the VT Chelsea Managed Monthly Income fund this ISA season. The past six months has seen considerable market volatility and the income approach has offered more defensive qualities in falling markets.

“An individual name within the fund I think is of particular interest is Montanaro UK Income. I strongly believe the UK is so out of favour that there must now be opportunities. This is where I believe the Montanaro UK Income fund, managed by group founder Charles Montanaro, can benefit from the Brexit tailwind should there be any sort of positive outcome. This is because the fund has less international earnings within the portfolio.

“I also like Nomura Global Dynamic Bond Hedged. Dickie Hodges' reputation goes before him and he is a very good reader of the macroeconomic and political environment, which I think is vital in the current market backdrop.”

Sam Holder, director

“I have a young family which means I am investing for the long-term, with the VT Chelsea Managed Aggressive Growth fund at the centre of my portfolio. I invest on a monthly basis, which helps take the sting out of any volatility stock markets experience.

“As my time horizon is quite long, I also like to make occasional satellite investments: smaller contributions to either niche or higher-risk funds. An area of the market I am currently looking at with interest is smaller companies. One fund I like in particular is the Standard Life Global Smaller Companies fund, managed by Alan Rowsell. Small-caps tend to outperform companies over the long-term and this fund has 50-60 stocks from across the entire globe. The fund focuses on growth and tends to avoid cyclical sectors like energy and materials.”

*Source: Fund factsheet, November 2018

Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views expressed are those of the authors and do not constitute financial advice.
Published on 20/03/2019