Four funds to consider for the 2018 Isa season

Each year investors get an allowance to invest tax-free in a stocks & shares Isa. This year’s allowance is £20,000 and the deadline for using it is just around the corner (6th April 2018). Marcus Brookes, Schroders’ head of multi-manager, names the funds he is backing for his portfolios.

Fixed income

Invesco Perpetual Tactical Bond Fund

“We’ve been through a 35 year bull market for bonds. It is unlikely we will look back in five to ten years and think there were many areas of fixed income which looked cheap in 2018.

“With attractive investment opportunities in the bond space increasingly hard to find, we think a global flexible fund, managed by two of the most experienced fixed income fund managers, is the best way to tackle the asset class.

“Paul Causer and Paul Read have worked together at Invesco Perpetual for over 20 years and have run the Invesco Perpetual Tactical Bond Fund since its launch in 2010. They are currently defensively positioned, with a low level of sensitivity to the negative effects of rising interest rates (ie. duration).”

UK equities

Majedie UK Income

“UK equities have made strong gains in this market cycle and the “growth” investment style has outperformed throughout. We think there could still be more performance to come from the stock market, but believe there will be a rotation towards the “value” style. This is where investors actively seek stocks that are undervalued by the market.

“Chris Reid, who has managed the Majedie UK Income fund since its inception, takes a cautious approach to value investing. He focuses on not only the valuation of a company, but also its solidity. He looks carefully at the strength of a company’s balance sheet to ensure it is likely to survive.

“Currently he is seeing value in UK financials, particularly selected insurers, which is an area we also think looks attractive at this point”.

Emerging markets

Artemis Global Emerging Markets Fund

“Emerging markets performed really well in 2017, but we think they remain good value relative to other regions. There are a number of catalysts which could continue to drive the area, including the improved political backdrop in South Africa and Brazil. The global economy picking up nicely should also serve emerging markets well.

“The only note of caution would be the potential for US protectionism to negatively impact the region, but we would see this as an opportunity for us to buy emerging markets at a cheaper level.

“We have backed the Artemis Global Emerging Markets Fund since its launch in 2015. It is managed by Peter Saacke and Raheel Altaf using the Artemis ‘SmartGARP’ approach.

“The fund is not too big, which means it has the flexibility to invest across the emerging markets spectrum. It is currently targeting some so-called ‘fallen angels’ such as energy and commodity stocks, as well as Chinese banks.”

Absolute return

Jupiter Absolute Return Fund

“We’ve been through a period of super-low volatility for markets. But this is unlikely to be the case going forward. We are about to see a significant change in the monetary policy backdrop, with the taps being turned off on quantitative easing and interest rate rises in the pipeline.

“We think that a fund that can prosper from both rising and falling share prices (by employing shorting techniques) seems appropriate at this juncture, and the Jupiter Absolute Return Fund fits the bill.

“It is a well-diversified fund run by James Clunie, who invests globally in equities and typically with low levels of exposure to overall market risk.”

Important Information: The views and opinions contained herein are those of Marcus Brookes, Schroders’ Head of Multi-manager, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. The sectors and securities shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell. This communication is marketing material.

This is marketing material and is intended to be for information purposes only, it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. The opinions in this document include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change. Issued by Schroder Investment Management Limited, 31 Gresham Street, London EC2V 7QA. Registration No. 1893220 England. Authorised and regulated by the Financial Conduct Authority.

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