Investors looking to top up their ISA in the days ahead of the end of the tax year could consider long-term outperformers such as Artemis Income, Lindsell Train Global Equity and JPM Emerging Markets, according to Hargreaves Lansdown. 
Laith Khalaf, senior analyst at Hargreaves Lansdown, said those who are making a last-minute contribution to their ISA can always put in some cash ahead of the deadline and then choose where to invest it later.
But for those determined to invest straight away, he pointed out that it is not a bad time to do so: “Most global stock markets are trading near their historical average valuation, which means it’s a reasonable time to be putting money to work in the market.”
Below, the investment analyst highlights three funds that he thinks could be good additions to ISAs this year.
UK – Artemis Income
Starting with the UK, Khalaf noted the home market is “unloved” at the moment – given the uncertainty surrounding the country’s withdrawal from the EU – and is therefore offering a relatively high yield at current valuations.
Performance of fund vs sector and index under Frost
Source: FE Analytics
This makes it attractive to income investors and, as such, the analyst suggested that the £5.6bn Artemis Income fund could be a good way to take exposure to the UK. “Fund manager Adrian Frost mainly invests in larger companies that make plenty of cash, which can support their dividends, and also grow them over time,” Khalaf explained.
The process behind the fund, which is co-managed by Nick Shenton and Andy Marsh, focus on companies’ cash flows and their ability to pay sustainable and growing dividends to shareholders. The managers also want companies that have a competitive advantage and operate in a space where barriers to entry are high.
Artemis Income’s portfolio tends to own between 50 and 70 holdings with a bias to UK large-caps; currently 78 per cent of the portfolio is in large-caps, with 17.2 per cent in mid-caps and 2 per cent in unquoted stocks.
Top holdings at the moment include BP, RELX Group and GlaxoSmithKline with financials, consumer services and oil & gas being the biggest sector exposures.
Since Frost started working on the fund in January 2002, it has generated a total return of 293.75 perc cent, outperforming the FTSE All Share by a wide margin and ranking it second in the IA UK Equity Income sector.
Artemis Income has ongoing charges figure (OCF) of 0.80 per cent and is yielding 4.25 per cent.
Global – Lindsell Train Global Equity
For investors looking to diversify their portfolio with the addition of some international exposure, Khalaf opted for the £6.6bn Lindsell Train Global Equity fund. This fund holds five FE Crowns for superior performance in terms of stock picking, consistency and risk control over recent years.
Performance of fund vs sector and index since launch
Source: FE Analytics
Since launch in March 2011, the fund has made a total return of 275.97 per cent. This is the second highest return in the IA Global sector and around twice the gain seen in its MSCI World index. It has done this while being among the least volatile members of its peer group and achieving some the best risk-adjusted returns.
“Fund managers Nick Train and Michael Lindsell are classic buy-and-hold investors,” Khalaf explained.
“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 not certain about and prefer to keep hold of an investment for long-term growth.”
The approach used by the managers believes that the market tends to undervalue high-quality, cash-generative and easily understood business franchises, which is an investment philosophy they share with Warren Buffett. Unilever, Heineken Holdings and Diageo are its largest individual holdings, while the largest geographic weightings are to the US, the UK and Japan.
Lindsell Train Global Equity has a 0.74 per cent OCF.
Emerging markets – JPM Emerging Markets
Khalaf’s final fund pick is from the IA Global Emerging Markets sector: JPM Emerging Markets. This £1.2bn fund holds four FE Crowns.
“Managers Leon Eidelman and Austin Forey invest in companies with healthy finances and sustainable earnings that have the potential to grow year after year, an approach which has delivered significant long-term outperformance,” the Hargreaves Lansdown analyst said.
Over the past 15 years – a period which captures the financial crisis and the following bull market – the JPM Emerging Markets has posted a 426.92 per cent total return. This is around 80 percentage points higher than the gain in the MSCI Emerging Markets index and ranks it third out of 22 peers in the sector.
Performance of fund vs sector and index over 15yrs
Source: FE Analytics
The process behind JPM Emerging Markets is largely bottom-up although there is a macroeconomic overlay in place. This portfolio has a focus on quality growth firms and has tended to allocate to areas that benefit from emerging market domestic demand and consumption, rather than those beholden to commodity prices and currency moves.
Its top holding at the moment is pan-Asian life insurance group AIA followed by e-commerce giants Alibaba and Tencent. China is the largest geographic weighting at 38.1 per cent while there’s 16.3 per cent in India and 8.3 per cent in Brazil.
JPM Emerging Markets has an OCF of 1.15 per cent.