Top 10 ISA funds
With Cash ISAs offering a relatively low return on investments, it is no wonder that many Chelsea clients continue to invest into Investment ISAs. Whilst there is more risk with Investment ISAs, compared with cash, the risk may be worth taking.
Top 10 income funds*
1. Invesco Perpetual Monthly Income Plus
2. Artemis Global Income
3. CF Woodford Equity Income
4. M & G Global Dividend
5. Rathbone Income
6. Threadneedle UK Equity Alpha Income
7. Newton Asian Income
8. M & G Optimal Income
9. Artemis Income
10. Henderson Strategic Bond
James Yardley, from our research team, has looked at why these funds may be so popular with those of our clients who are looking for income.
Invesco Perpetual Monthly Income Plus
This fund, the flaship Invesco bond product, has delivered superb performance for Chelsea investors and it is no surprise to see it at the top of this list. It has returned 98.49% over the past 10 years versus just 57.51%** for the IA Sterling Strategic bond sector. Unlike most of its peers it has the flexibility to invest up to 20% in equities.
Paul Read and Paul Casser have managed the fixed income portion of the portfolio since 1999. The fund looks to add value, both by anticipating changes in the economy and through credit analysis on individual companies. The equity portion of the fund, now managed by Ciaran Mallon, aims to invest in companies which can provide a relatively high and stable income.
CF Woodford Equity Income
Neil Woodford has been one of the UK's top fund managers for over 25 years and last year he launched his own company and fund. Neil is a long-term investor and typically avoids cyclical and low quality businesses which has helped his fund to hold up well in tough markets. He is not afraid to ignore whole parts of the market and famously sold his last bank well before the financial crisis.
His new fund has started very well, returning 13.73% since launch in June versus just a 5.90% return for the IA UK Equity Income sector.**
Artemis Global Income
This fund avoids investing in the stereotypical dividend stocks you find in most global equity income funds. Manager Jacob de Tush-Lec focuses on mid-cap companies. He starts his process by screening for free cash flow rather than dividend yield. Jacob has a value bias; he buys out of favour companies with a catalyst for change in the near future.
Performance has been exceptional. It is top of its sector and has returned 105.81% since launch in 2010, almost 20% more than its nearest competitor.*** It is not surprising to see that so many Chelsea clients own this fund.
Switching versus converting
Please be aware that you cannot change your funds from accumulation units to income units by processing a switch. You will need to call us in the office to process a unit conversion.
If, however, you are switching out of the M&G Recovery fund Acc, for example, and you would like to switch into the CF Woodford Equity Income Fund Inc, for example, you can process this on our website.
For a recap on how to switch on our website, click here.
Transferring into the Chelsea FundStore
You may have been thinking about transferring your relatively low returning Cash ISA into an Investment ISA. You can do this with us at Chelsea by simply completing an ISA transfer form. This will not affect your ISA allowance. Why not have a look at our EasyISA portfolios for some starting points?
You can make changes to your portfolio in three ways:
*as at 25th February 2015. These are the top income funds, from our Selection, that our clients hold, within an ISA.
** FE Analytics, 26th February 2015
*** FE Analytics, 03/03/2014