Best Investment ISAs – 5 ideas for 2020-21

If you are looking for inspiration for your 2020-21 ISA, we have put together 5 investment fund ideas you might want to consider.

We also outline some of the features you should look for when considering an investment platform for the fund you want to invest in.

All of the funds featured below can be put in an ISA, junior ISA or Self Invested Pension (SIPP) or as a direct investment.

1. Legal & General UK 100 Index Trust

Invest From
£25 per month or £100 single
Fund

L&G UK 100 Index Trust

Ongoing Charge
0.48%
ISA, SIPP & Direct Investment
Our view: This is a unit trust fund that tracks the FTSE 100 index of the largest companies on the UK stock market. Lots of these companies are big multinationals that make most of their money overseas. So even though it only invests in UK companies, investors get exposure to the global economy too. Legal & General has a large and experienced team. They keep their costs low and have done a good job of performing similarly to the index to date. Income generated is can be taken quarterly or reinvested. You can invest up to £20,000 this tax year in an ISA, with a low minimum of £100 lump sum or £20 per month, and you can manage your account easily online. Available via: L&G Investor Platform »
Important information: Please remember the value of your investment and any income from it may fall as well as rise and is not guaranteed. You may get back less than you invest.

2. Vanguard FTSE All-World UCITS ETF

Invest From
£25 per month or £100 single
Fund

Vanguard FTSE All-World UCITS ETF

Ongoing Charge
0.22% pa
ISA, SIPP & Direct Investment
Our view: Replicates returns from the FTSE All World, an index that encompasses both developed and emerging markets from around the world. Ranks among the cheapest products of its type. This is an ‘Accumulation’ product, meaning any income generated is reinvested. Available via: Fidelity Platform »
Important information: Please remember the value of your investment and any income from it may fall as well as rise and is not guaranteed. You may get back less than you invest.

3. HSBC MSCI AC Far East ex Japan UCITS ETF

Invest From
£25 per month or £100 single
Fund

HSBC MSCI AC Far East Ex Japan UCITS ETF

Ongoing Charge
0.45% pa
ISA, SIPP & Direct Investment
Our view: Provides exposure to a fast-growing market, encompassing both developed and emerging markets in Asia. The product is priced more cheaply than rivals. Any income generated from underlying positions is reinvested. Available via: Fidelity Investor Platform » Special Offer: Invest and get £25 cashback.  T&Cs apply.
Important information: Please remember the value of your investment and any income from it may fall as well as rise and is not guaranteed. You may get back less than you invest.

4. Legal & General Global Technology Index Trust

Invest From
£25 per month or £100 single
Fund

L&G UK 100 Index Trust

Ongoing Charge
0.48%
ISA, SIPP & Direct Investment
Our view: This is a unit trust fund that tracks the FTSE 100 index of the largest companies on the UK stock market. Lots of these companies are big multinationals that make most of their money overseas. So even though it only invests in UK companies, investors get exposure to the global economy too. Legal & General has a large and experienced team. They keep their costs low and have done a good job of performing similarly to the index to date. Income generated is can be taken quarterly or reinvested. You can invest up to £20,000 this tax year in an ISA, with a low minimum of £100 lump sum or £20 per month, and you can manage your account easily online. Available via: L&G Investor Platform »
Important information: Please remember the value of your investment and any income from it may fall as well as rise and is not guaranteed. You may get back less than you invest.

5. iShares Physical Gold ETC

Invest From
£25 per month or £100 single
Fund

iShares Physical Gold ETC Fund

Ongoing Charge
0.25%
ISA, SIPP & Direct Investment
Our view: iShares physically-backed Exchange Traded Commodities (iShares Physical ETCs) are series of secured metal-linked debt securities that trade on one or more regulated exchanges and offer investors easily accessible, liquid and transparent exposure to physical precious metals. iShares Physical ETCs provide investors with exposure to the performance of individual precious metals without the need to take physical delivery or trade commodity futures contracts. The iShares Physical Gold ETC seeks to track the day-to-day movement of the price of gold, less fees, by holding gold bullion. The gold bullion backs the securities issued and is valued daily at the London PM fix price. The gold bullion is held as allocated gold bars with the custodian, JPMorgan. State Street acts as the Trustee. iShares Physical ETCs are exchange traded commodities and are neither funds nor exchange traded funds. Available via: Fidelity Investment Platform » Special Offer: Invest and get £25 cashback.  T&Cs apply.
Important information: Please remember the value of your investment and any income from it may fall as well as rise and is not guaranteed. You may get back less than you invest.

How to choose the best investment fund for my ISA

Selecting a fund for your 2020-21 ISA will depend on your requirements and your attitude to risk. Different funds have different risk profiles. With lower risk correlating with potentially lower returns and higher risk correlating with potentially higher returns. With stockmarket  investment you should be looking at a 5 year plus timeframe.

Fund managers produce factsheets where they will grade the risk profile typically from 1 to 7. For each of the funds above when you click through to the fund platform you can review fund performance over 1 to 5 years, the makeup of the fund portfolio e.g. typically the top 10 holdings; information about the fund manager; risks of the fund; you can also access additional literature including the latest monthly factsheet and key investor information which will allow you to make an informed decision before you invest.

What is the best investment platform to use for your 2020-21 ISA?

Today’s investor has a lot of options to choose from.  One of the key considerations is cost. However picking the “cheapest” is not as simple as it sounds, as each platform has its own costing model which often makes it difficult to compare like for like. Below we have outlined what can expect to pay in charges for 4 of the UK’s largest most popular investment platforms based on investing in a low cost tracker fund (iShares Core FTSE 100 UCITS ETF).

Investment Platform Annual Platform Fee iShares OCF
Fund Charge
Annual Charge
on £10,000
Annual Charge
on £20,000
Annual Charge
on £40,000
Annual Charge
on £100,000
Annual Charge
on £250,000
Interactive Investor £9.99 pm flat fee 0.7% £126.88 £133.88 £154.88 £189.88 £294.88
Hargreaves Lansdown 0.45% up to £249,999, reducing
to 0.25% from £250,000 to £1m,
reducing to 0.10% from £1m to £2m.
No fee for assets over £2m
0.7% £52 £104 £208 £520 £1,300
AJ Bell 0.25% on first £250K 0.7% £32 £64 £128 £320 £800
Fidelity 0.35% from £7,500 to £249,999,
reducing to 0.2% from £250,000
to £1m. No fee for assets over £1m
0.7% £42 £84 £164 £420 £675

As you can see the right platform for you will depend on how much you are investing.

Other considerations include:

  • How easy is the platform to use and what tools and research is on offer
  • What fund discounts are there? different platforms have negotiated different discounts on funds
  • Customer reviews – useful in understanding strengths and weaknesses of platform providers
  • Level of customer service provided

Undecided on your options?

When it comes to making investment decisions using the services of a qualified independent investment adviser may be worth considering.

Most IFAs will offer a free no obligation initial discussion. A good adviser based on what you are looking to achieve will put together a plan for your situation. Click here for independent financial advice.

 

Important Risk Information:

This website contains information only and does not constitute advice or a personal recommendation in any way whatsoever. The value of investments and income from them can fall as well as rise and you may not get back the full amount invested. The tax efficiency of ISAs is based on current tax law and there is no guarantee that tax rules will stay the same in the future.

Different types of investment carry different levels of risk and may not be suitable for all investors. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment and should read the product literature. If you are in any doubt as to the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.

Written by Editorial Team ,
23rd October 2020