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isa and sipp: more valuable than ever

Shelter your money from tax in ISAs and SIPPs in minutes

ISA or SIPP: act before 5 April

The tax year ends on 5 April so time is running out to open an ISA or SIPP for this tax year.

With UK taxes at a 30-year high – and strong evidence it could rise further – using your valuable tax shelters could be the smartest thing you do right now.

You can choose your ISA or SIPP investments now or simply add cash and decide later – it's up to you.

This is not personal advice, if you're not sure whether an investment is right for you, please contact us for advice. Investments and income can fall as well as rise in value so you could get back less than you put in. Tax rules can change and benefits will depend on circumstances.

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Fantastic service – I rarely need to contact, but when I do the staff are knowledgeable, quick and helpful.

MR BARKER, Cheshire

Secure your allowances before 5 April

The tax year ends on 5 April so time is running out to make the most of this year's ISA and SIPP allowances.

With UK taxes at a 30-year high – and strong evidence it could rise further – using your valuable tax shelters could be the smartest thing you can do right now.

You can choose your ISA or SIPP investments now or simply add cash and decide later – it's up to you.

This is not personal advice, if you're not sure whether an investment is right for you, please contact us for advice. Investments and income can fall as well as rise in value so you could get back less than you put in. Tax rules can change and benefits will depend on circumstances.

MORE ON ISAS MORE ON SIPPS

MORE ON ISAS

MORE ON SIPPS

Last-minute ISA and SIPP fund ideas

Looking for investment ideas? Take a look at the three funds our experts think could be excellent choices.

Lindsell Train Global Equity

Wealth 50Wealth 50
  • A great way to invest in leading companies across the globe
  • Full of iconic brands that have stood the test of time
  • A truly long-term view – the managers don’t often make changes

FIND OUT MORE

Find out more

Artemis Income

Wealth 50Wealth 50
  • UK companies look good value right now
  • One of our favourite UK funds
  • Attractive yield of 4.3% (not a guide to the income you’ll get in future)

FIND OUT MORE

Find out more

JPM Emerging Markets

Wealth 50Wealth 50
  • A great choice for long-term growth
  • Invests across higher-risk emerging markets, from India to Hong Kong and Brazil
  • A focus on quality companies with sustainable growth prospects

FIND OUT MORE

Find out more

Lindsell Train Global Equity

Wealth 50Wealth 50

Lindsell Train Global Equity – Keep calm and hold on

In Alice in Wonderland one had to run fast in order to stand still. In the stock market, the evidence suggests, one who buys right must stand still in order to run fast.

Thomas Phelps, a distinguished investor, knew the true meaning of long-term investing.

He told us it's one thing to find great companies. But most people struggle to hold onto them as they grow to become more successful.

That's because many investors crave activity. They jump on what's moving and can't sit on an investment that isn't going anywhere in the short term. They lose patience with anything moving against them. But these investors risk losing out on potential returns.

And the media doesn't help. Fast-paced news headlines make it seem like important things happen every day. They don't. There's always going to be noise that could shake you. The key is to avoid making rash decisions, and not to buy or sell an investment without any real justification.

It's easier said than done. Holding on to the same investment can be a real challenge. It's human nature for our emotions to get the better of us, cloud our judgment, and distract us from long-term thinking.

There are few who get the "buy right and hold on" philosophy right. So we spend a lot of time finding those that we think can do just this.

Managers’ outlook

Nick Train, Michael Lindsell and James Bullock are classic buy-and-hold investors. They invest in companies they think are truly exceptional and hold them, ideally, forever. They don't try to make a quick profit from a company they're less certain about, and prefer to keep hold of an investment in the hope it steadily grows. Last year, for example, they didn’t invest in any new companies and only sold one, Dr Pepper Snapple. It was taken over and had made healthy gains by that point.

This might not sound like the most exciting approach. But in a world of uncertainty the unglamorous can provide great opportunity.

The managers invest across the globe, but only a small number of their highest-conviction ideas make it into the Lindsell Train Global Equity Fund.

This means there's more potential for each one to have a big impact on returns, though it increases risk.

How do the managers invest?

They especially like companies that use technology to make a difference. These aren't necessarily traditional tech firms. But they use technology to improve what they do, solve problems and allow them to do things better, faster and cheaper.

Even some of the fund's biggest investments in consumer goods companies, such as Unilever, Diageo and Heineken, do this. For example, by offering an online regular subscription service for things like razor blades. Or making sure their products can be ordered through home-based Artificial Intelligence, including Amazon's Alexa.

More information on this fund including charges

Lindsell Train Global Equity KEY INVESTOR INFORMATION

Invest now

Lindsell Train Global Equity performance since launch

Past performance isn't a guide to future returns. *Source: Lipper IM to 28/02/19

We like the managers' straightforward approach, long-term outlook, and commitment to their philosophy. They’ve shown an ability to add value for investors over many years. Since the fund launched in 2011, it's grown 268.62%* compared with 132.55% for the broad global stock market. It's a phenomenal track record, and one few others can compete with. Past performance isn't a guide to future returns though. Like all funds its value will fall as well as rise, so you could get back less than invest.

Annual % Growth Feb 14-15 Feb 15-16 Feb 16-17 Feb 17-18 Feb 18-19
Lindsell Train Global Equity 21.2 12.9 25.1 22.6 15.0
FTSE World 17.1 -1.5 37.4 7.3 3.5

Source: Lipper IM to 28/02/19

We think investors in this fund should take a similar approach to its managers. It's a great choice for a long-term growth portfolio – we suggest tucking it away in the back drawer, while some of the world's most-respected companies get to work at trying to grow your wealth. And it's got some of the industry's most-talented stock pickers looking after it, which is why it's one of our favourites for exposure to companies from across the globe.

This is an offshore fund so investors aren’t normally entitled to compensation through the Financial Services Compensation Scheme. The fund currently has a holding in Hargreaves Lansdown plc.

Fund information

Net initial charge: 0%
Ongoing charge: 0.71% p.a.
Saving via HL**: 0.20% p.a.
Net OCF: 0.51% p.a.
Max HL charge: 0.45% p.a.
Performance fee: No
Max total annual charge: 0.96% p.a.

See how these charges impact your investment

**Some or all of the saving is provided through Loyalty bonus which is tax-free in an ISA or SIPP. However, they may be subject to tax in a Fund and Share Account which would, in effect, reduce their value and increase the net ongoing charge.

Artemis Income

Wealth 50Wealth 50

Welcome to Britain, the home of equity income

It’s no secret we’re fans of equity income investing. It’s simple and effective.

So how does it work? When you own shares in a company, you own a small part of that business. If the company makes a profit, you own part of that too. Some companies reinvest their profits back into the business, while others pay out most of them as dividends to shareholders. This is what's known as equity income investing.

Uncertainty can create opportunity

We think now is a great time to consider the UK as a place for income.

There are a lot of issues facing the UK at the moment, with Brexit uncertainty the most obvious. But this doesn't mean UK companies can't continue to flourish. There are some fantastic businesses here, and some sell their products all over the world so they don't solely rely on the health of UK consumers.

This uncertainty has left the UK market unloved and unwanted by many investors. A lot of money has been taken out of UK funds, but this means share prices currently sit at relatively attractive levels. It's not always comfortable investing in areas that others are avoiding, but it often presents opportunities that could produce better long-term results.

The UK market’s one of the best for yield

Not only that, the UK's currently one of the world's highest-yielding stock markets. Its yield is now higher than at any point since the depths of the financial crisis.

The UK has tended to pay a higher level of income than other developed markets over the longer term too. It’s one reason we consider the UK to be the home of equity income investing.

The best companies grow their profits, and dividends, over the long term. And even when the stock market goes through a tough patch and share prices fall, the strongest companies keep paying dividends to shareholders. It means you're getting paid while you wait for the market to recover.

It's not easy identifying these companies though. The good news is you have the option to leave the decision-making to a professional investor.

It’s home to great fund managers

The UK Equity Income sector has some great managers. One of our favourites is Adrian Frost. He manages the Artemis Income Fund with the help of Nick Shenton and Andy Marsh. They mainly invest in larger companies that make plenty of cash, which could support dividends. Importantly they must believe a company has the ability to grow its dividend over time.

More information on this fund including charges

Artemis Income KEY INVESTOR INFORMATION

Invest now

Value of £10,000 invested in 2002 with dividends re-invested

Past performance isn't a guide to future returns. *Source: Lipper IM to 28/02/19

Frost has done a great job since running the fund in 2002. If you invested £10,000 in 2002 and re-invested the dividends, your investment would now be worth £36,242*, though past performance is not a guide to future returns. The fund currently yields 4.3%, which will vary and isn't a reliable indicator of future income. The fund will fall as well as rise in value so you could get back less than you invest.

We think now is a good time to consider a UK Equity Income fund as part of a diversified portfolio. They're a great option for an income investor. And if you don’t need the income now you can choose to reinvest it instead, which boosts the potential for long-term growth. In our view, Artemis Income is one of the best ways to invest in this sector and has excellent long-term potential.

Annual % Growth Feb 14-15 Feb 15-16 Feb 16-17 Feb 17-18 Feb 18-19
Artemis Income 8.2 -3.8 16.3 7.0 0.9
FTSE All Share 5.6 -7.3 22.8 4.4 1.7

Source: Lipper IM to 28/02/19

Fund information

Net initial charge: 0%
Ongoing charge: 0.80% p.a.
Saving via HL**: 0.20% p.a.
Net OCF: 0.60% p.a.
Max HL charge: 0.45% p.a.
Performance fee No
Max total annual charge: 1.05% p.a.

See how these charges impact your investment

**Some or all of the saving is provided through Loyalty bonus which is tax-free in an ISA or SIPP. However, they may be subject to tax in a Fund and Share Account which would, in effect, reduce their value and increase the net ongoing charge.

JPM Emerging Markets

Wealth 50Wealth 50

Why invest in emerging markets?

Emerging markets have huge potential. They make up about 85% of the world’s population but only 45% of the global economy, so there’s bags of room to grow.

They’re responsible for the surge in global middle classes, who are spending more and more on goods and services. Consumption by China’s middle classes is expected to overtake America's by 2020, and India is forecast to become the biggest spender in the following decade.

These markets are going through lots of change and this presents opportunities for companies to grow, although they've had a tough year. Developing economies used to mainly rely on selling their abundance of natural resources to other countries. But innovation’s on the rise, so technology is becoming an increasingly important part of what they do – from smartphones and IT services, to some of the world's biggest online shopping platforms.

Emerging markets have grown much more than developed ones over the long term, but they’ve had bigger drops along the way. They're higher-risk, so the challenges shouldn't be overlooked.

Recently, the well-reported US-China trade war has done little to inspire investors’ confidence. The strength of the US dollar and rising interest rates has also been a headwind. Many companies have previously borrowed money in dollars to help them grow, but higher rates could make these debts more expensive to pay back.

The World Economic Outlook predicts growth in developing economies to keep outstripping developed ones in the years ahead. The Chinese government is shifting its focus from rapid debt-driven expansion to more sustainable quality growth. India’s economy is poised to pick up again this year after coming off the boil recently. In Brazil, the newly elected president is set to embark on series of economic reforms.

There are thousands of companies in developing countries to invest in. And with a raft of different economies, languages and cultures, investing in them is best left to an expert. There aren’t many fund managers we think can beat the broader emerging markets over the long term though. Here are two we think can, although of course there are no guarantees.

JPM Emerging Markets

Leon Eidelman and Austin Forey manage the JPM Emerging Markets Fund and invest in high-quality companies they think have excellent long-term growth potential. They like companies with healthy finances and sustainable earnings that have the potential to grow year after year.

Companies in the portfolio include Chinese online giants Tencent and Alibaba, Indian financial conglomerate HDFC, and MercadoLibre, Latin America’s most popular e-commerce site. Other companies are based in a wide range of countries including Hong Kong, Brazil and South Africa.

Eidelman and Forey are supported by a strong team of analysts to help them scour the market for companies that fit their bill. There are 15 analysts alone covering China. Such a large number of people means they can research companies rigorously. They also have the flexibility to invest in smaller companies, which can increase risk.

More information on this fund including charges

JPM Emerging Markets KEY INVESTOR INFORMATION

Invest now

Austin Forey track record

Past performance isn't a guide to future returns. *Source: Lipper IM to 28/02/19

The fund's long-term performance speaks for itself. Since Forey took over in July 1997 it’s grown 385%* compared with 279.2% for the IA Global Emerging Markets sector. The fund has tended to hold up a bit better when the broader emerging stock market falls, and perform broadly the same when it rises. Past performance isn’t a guide to future performance. Investments will rise and fall in value as has happened over the last year, so you could get back less than you invest.

We think JPMorgan Emerging Markets is an excellent choice for growth investors prepared to take a long-term outlook. That’s why you’ll find it on the Wealth 50 list of our favourite funds.

Annual % Growth Feb 14-15 Feb 15-16 Feb 16-17 Feb 17-18 Feb 18-19
JPM Emerging Markets 17.3 -16.4 46.6 21.6 -4.6
IA Global Emerging Markets 12.3 -13.8 44.4 16.6 -7.1

Source: Lipper IM to 28/02/19

Past performance isn't a guide to future returns.

Fund information

Net initial charge: 0%
Ongoing charge: 1.15% p.a.
Saving via HL: 0.50% p.a.
Net OCF: 0.65% p.a.
Max HL charge: 0.45% p.a.
Performance fee No
Max total annual charge: 1.10% p.a.

See how these charges impact your investment

Stocks and Shares ISA

Shelter up to £20,000 from UK tax with the number one investment platform

  • Save tax – grow your money free of UK income and capital gains tax

  • Accessibility – although investing is best for the long term, you can take your money out whenever you need to

  • Wide investment choice – choose from 3,000 funds, UK and international shares, investment trusts and more

Tax rules can change and the benefits of investing in ISAs depend on your circumstances.

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Self-Invested Personal Pension (SIPP)

Get 20% tax relief (higher/additional rate taxpayers can claim up to 46%) with our award-winning pension

  • Save tax – grow your money free of UK income and capital gains tax
  • Great value – maximum 0.45% p.a. to manage your SIPP investments. View our SIPP charges
  • Wide investment choice – choose from 3,000 funds, UK and international shares, investment trusts and more

Tax rules can change and the benefits of investing in a SIPP depend on your circumstances. You can only access the money in a SIPP from age 55 (57 from 2028).

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If you'd like more time to decide where or when to invest, that's no problem. Secure your ISA and SIPP allowances with cash now and choose investments when you're ready.

As long as you add money before the deadline, any investment you make will count towards this year's allowance.

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New to investing?

Just remember that unlike cash, which is guaranteed, investments can fall as well as rise in value, so you could get back less than you invest. The information in these videos isn’t personal advice – please ask us for advice if you’re not sure which investments are right for you.

Get to grips with the basics

First things first – what does investing your money involve?

See how investing money works, and why you might want to consider it as an option

The essentials of Stocks and Shares ISAs

ISAs are one of the most popular ways to save tax.

Discover how ISAs work, their key benefits and why you need to consider using your allowance by 5 April.

Tax rules can change and benefits will depend on circumstances.

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