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Where are the Professionals Putting their ISA Cash?

We asked Morningstar's investment professionals - fund analysts and portfolio managers - where they would be investing their personal ISA allowance

Emma Wall 10 March, 2016 | 8:30AM

With less than one month left of this tax year time is running out for ISA and pension investors – or anyone looking to boost their savings and reduce their HMRC bill. Read our Guide to ISAs, Pensions and Tax-efficient investing to make sure you don’t get left behind.

 

 

Ever wondered where the fund experts choose to invest their own money? Well we have the answers, and for this tax year emerging market stocks and bonds are proving popular. There is less than a month to go until the end of the 2015/16 tax year, which means you have four weeks to deploy your cash in an ISA and benefit from this year’s allowance of £15,240.

Here at Morningstar UK our active and passive fund analysts and portfolio managers face the same task as private investors – working out where the best place to invest is to meet their investment needs. Where you should invest your ISA allowance depends on your age, financial obligations, investment horizons, risk appetite and existing holdings.

Looking for Value in a Volatile Market

Morningstar’s philosophy advocates medium to long-term investing – rather than speculating on market nuances, and these ISA picks reflect where the investment professionals consider there to be longer term growth opportunities. The results were varied, with some preferring to stay in cash, to sit out the market volatility, poised to take advantage of further dips when they come.

Investors who are struggling to find compelling ISA ideas now can prepare their cash using an online fund platform and await these opportunities. Cash parks allow investors to "park" their cash before investing it in an ISA, protecting its tax-free status and buying the individual more time to choose which fund to invest in. You can then return to the investment platform when you consider there is a worthy investment opportunity and transfer your money into a stock or fund without losing its tax-efficient status. Fund platforms such as Hargreaves Lansdown often pay a small amount of interest on the cash while it sits in the ISA wrapper.

Emerging Markets Prove Popular

Those Morningstar investment professionals who were ready to invest on the whole favoured equities over bonds and emerging markets over developed ones.

Edward Fane, portfolio manager for Morningstar Investment Management said that he was investing his own money as he was investing the client portfolios – on a valuation basis.

“There have been some interesting pockets of value opening up in the market,” he said. “I’d be looking to invest in emerging market debt including the local currency side, as well as emerging market equities. Oil and gas has also been a theme for us and I will be looking there.”

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author Emma Wall

Emma Wall  is Editor for Morningstar.co.uk