Whether that will happen this year remains to be seen, as recent figures from the Investment Association showed that ISAs were hit with a net retail outflow of £102m through fund companies and five major platforms in February.
While not everyone is enamoured with the so-called ISA season, as you’ll see below, investors certainly seem to be very cautious at the moment with the looming general election and other headwinds.
We’ve rounded up five of our favourite stories of the week below. From all the FE Trustnet team, have a great long Easter weekend!
Gleeson: Why I shun the marketing “frenzy” of ISA season
Reporter Lauren Mason spoke to FE Research head Rob Gleeson (pictured) this week hoping to discover his ISA picks for this year, only to walk away with a very different story.
“The industry tries to whip up a buying frenzy in order to push products, and actually, if you had a well-thought-out portfolio beforehand, there’s no need to add to it just because it’s ISA season,” Gleeson (pictured) said.
“The whole idea of pushing funds on people, ‘what should you buy, what should you buy, what should you buy’, isn’t the way I would be advising my customers if I were an advisor.”
Gleeson adds that investors should be making long-term plans for their portfolios and sticking to them, rather than just buying funds at the end of the tax when groups have ramped up their marketing efforts.
Other commentators agreed with Gleeson’s broad point, with Martin Bamford, financial planner and marketing director at Informed Choice, labelling ISA season “a silly, marketing-driven event”.
Funds to build a monthly income portfolio for retirement
FE Trustnet head of content Joshua Ausden returned to the subject of retirement income this week, looking at funds which are highly recommended by the experts and can be used to create a portfolio that pays out in each month of the year.
A simple option would be to buy a specialist monthly-income paying equity income fund, of which there are five in the UK Equity Income and UK All Companies sectors. The five crown-rated Threadneedle UK Monthly Income fund is a standout performer from a total return point of view.
Income earned from £1,000 2010-2015
Source: FE Analytics
However, investors might not want to restrict themselves to these offers so Ausden scoured the sectors to find combinations of funds that would ensure a pay out came in every month, with the likes of Trojan Income, Rathbone Income and CF Woodford Equity Income.
Have another read of the article to find out which other funds are good candidates for a monthly retirement income portfolio.
Equity income funds you haven’t had to worry about for years
Keeping with the theme of income, FE Trustnet looked through the IA UK Equity Income to see if any funds have managed to stay ahead of their benchmarks in every month of the past three years.
We found that 11 funds have achieved this when looking at three-year returns, including the likes of Unicorn UK Income, PFS Chelverton UK Equity Income and Schroder UK Alpha Income.
When a one-year view is look at, just five funds make the grade. Old Mutual UK Equity Income and Threadneedle UK Equity Income are two examples.
But one fund appears in both lists: Martin Cholwill’s five FE Crown-rated Royal London UK Equity Income fund. The fund has been a consistent outperformer over recent year and is well respected by analysts, earning itself a place of FE Research team’s Select 100 and an ‘A’ rating from Square Mile Investment Consulting & Research.
Performance of fund vs sector and index over 3yrs
Source: FE Analytics
Conway: Building a diversified cautious portfolio has “never, ever been harder”
Hawksmoor’s Ben Conway told senior reporter Alex Paget this week that it has “never, ever” been harder to build a cautious and diversified portfolio as six years of ultra-low interest rates and copious amounts of money printing has left all areas of the market expensive and correlated.
“You cannot lose sight of fact that the current environment is unprecedented. These are ridiculous times, absolutely ridiculous,” Conway said.
“This is what happens when the yield curve is so flat and a high proportion of government bonds have negative yields. You have to take a step back and you shouldn’t listen to people who claim they know how markets will perform because no-one knows how it is going to pan out.”
Conway and his co-managers Daniel Lockyer and Richard Scott have recently been buying absolute return funds such as Henderson UK Absolute Return and BH Macro, along with more esoteric offerings like RWC Global Convertibles and Artemis Strategic Assets.
Investors drop flagship UK funds: Should you do the same?
While UK equity income funds remain ever popular with investors, they have been fleeing from the IA UK All Companies sector in droves.
Recent figures from the Investment Association showed that £615m was pulled out of the peer group in February. This followed £679m in net retail redemptions from the sector in January.
Some of the industry’s more recognisable funds have been hit with outflows over recent months so FE Trustnet asked the experts whether investors should be selling now.
Five funds to buy and hold for the extreme long term
Meanwhile, over on Trustnet Direct, three experts revealed the funds they would feel comfortable holding on to for a significant length of time.
Adrian Lowcock, head of investing at AXA Wealth, went for Artemis Income and Lindsell Train UK Equity – with Newton Real Return to hedge his risk.
Chris Wise, investment director at Gemmell Financial Services, went for the cautious option of Standard Life Global Absolute Return Strategies.
Patrick Connolly, head of communications at AWD Chase de Vere, says there are three funds in particular he has held in his portfolio for the long-term that he feels comfortable holding for much longer. Two of these – Aberdeen Emerging Markets and First State Emerging Markets Leaders – are soft-closed, while the other is Schroder Recovery.
