How do you fancy a taking a slightly more adventurous stance with part of your Individual Savings Account allocation this year? Sometimes, taking some extra risk can pay off in the long run, especially after markets have already fallen significantly as they have of late.
Adding so-called satellite funds to a stable portfolio of chosen funds can inject a degree of spice to your holdings – and possibly lead to bumper profits. Of course, investing in racier funds does come with a health warning: along with the chance of better-than-expected returns is the risk of underperformance.
There are a number of ways investors could boost their ISAs. There are funds investing in emerging markets, smaller companies funds, concentrated portfolios, ‘special situations’ and other specialist options.
Here we look at five examples.
This fund invests in 40-45 large and medium-sized companies in emerging markets. Manager Rasmus Nemmoe has an absolute return mindset and looks for quality companies that can demonstrate sustained and predictable growth over the long-term. Meeting firms at their premises to get an understanding of their culture is key to the investment process. As such, the team carries out around 1,500 company meetings per year.
Run since launch by Cormac Weldon, this fund’s holdings reflect the manager’s view of the US economy. It will typically hold around 50-70 stocks to strike a balance between being focused but diversified enough to mitigate volatility. In a recent update, the manager pointed out that data on US growth continues to be positive, even though there is some slowdown from the rapid rate of expansion seen in early 2021.
This fund, which is managed by Giles Rothbarth, invests in companies of all shapes and sizes across Europe. It favours those that are undervalued or demonstrating good growth potential. It invests in companies with medium to long-term earnings power that’s greater than the market, as well as those in restructuring or turnaround situations. Considering its size (c£5bn in assets under management*) the portfolio is relatively concentrated in around 50 holdings.
Run by Jeremy Podger, this fund is made up predominantly of larger companies. Holdings fall into one of three categories, forming a blended portfolio that can deliver consistently through all market conditions. The categories are corporate change; exceptional value; and unique businesses – companies with a dominant position within their industries, which should be able to grow for many years to come.
This fund taps into the expertise of the Gravis group to create a portfolio of renewable energy and energy-efficiency related projects that are benefiting from the secular move to more sustainable energy demands. It looks to generate an attractive income from a portfolio of assets that derive energy from renewable, zero emissions sources, as well as companies saving energy through efficiency measures.
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views expressed are those of the author and do not constitute financial advice.