Junior ISA Fund Picks from the Professionals

The probability that shares will outperform cash savings is 75% over five years, increasing to 90% over 10 years and 99% over 18 years

Kara Gammell 6 March, 2018 | 1:58PM
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young family child trust fund Junior ISA Jisa tax efficient savings

Setting up a JISA is easier than you might think. Many of the main fund platforms offer junior stocks and shares ISAs. These tend to levy an annual fee, and as with any other investment fund, management fees or share dealing fees will be due too.

For beginners with smaller sums to invest, Hargreaves Lansdown is worth a look. Admittedly, it is one of the more expensive firms its own charge is 0.45% a year, on top of the fees charged by the investment funds you choose – but its website is easy to use and provides practical information to help you get started. And it is well known for top-notch customer service.

Fidelity Personal Investing is also well suited to first-time investors as it offers comprehensive guidance. It also has lower charges, typically 0.35% plus fund costs.

While Vanguard is a cheaper option with a low annual account fee of just 0.15%, which is capped at £375 per year. But you must put in a minimum of £100 per month, which might put some first-timers off.

Fund Picks from the Pros 

Choosing which funds to choose can feel an overwhelming task for novice investors.

Philippa Gee, the founder of Philippa Gee Wealth Management, suggested: “I would always go for something diversified and not expensive such as Vanguard LifeStrategy 60% Equity, L&G Multi Index 5 or Standard Life Myfolio Market III.”

The Vanguard offering earns a Gold Rating from Morningstar fund analysts. Analyst Randal Goldsmith says Vanguard LifeStrategy 60% Equity is a strong offering for investors seeking a low cost moderate allocation fund.

“Vanguard’s approach to its LifeStrategy range is simple and transparent, offering five funds differentiated by their target equity-to-bond allocations,” he explains. “The LifeFund range invests only in Vanguard passive funds. Its straightforward approach, plus evidence that management continually and robustly examines its assumptions and research, helps the range earn a Positive rating for Process.”

Patrick Connolly, chartered financial planner at advisers Chase de Vere, recommended three funds worth a look – Investec Cautious Managed, HSBC FTSE All Share Index and Rathbone Global Opportunities.

The Investec fund is Silver Rated by Morningstar analysts. Goldsmith says it is suitable as a core holding for patient investors who are looking for long-term real return and willing to accept periods of extreme divergence from mainstream moderate-allocation multi-asset peers.

Manager Alastair Mundy is one of the United Kingdom's leading value investors with almost 30 years' investment experience. He looks for stocks that are deeply out of favour, starting with those that have fallen at least 50% from their five-year high. 

Both the HSBC fund and the Rathbone Global Opportunities fund are also Silver Rated.

"My advice to parents, especially novice investors, would be to keep things cheap and simple," said Martin Bamford, a financial adviser at Informed Choice.

"I’m a fan of the HSBC FTSE All-Share fund, Vanguard LifeStrategy 80% Equity or Fundsmith Equity," he said.

The HSBC fund is Silver Rated, while Vanguard and Fundsmith earn the very best Morningstar analyst rating of Gold.

“Fundsmith is one of the strongest options for investors seeking exposure to high quality global equities,” says Morningstar analyst Pete Brunt.

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.

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Kara Gammell

Kara Gammell  is a freelance journalist and author, specialising in personal finance and consumer issues, writing for Morningstar.co.uk

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