Where are the Chelsea experts investing this year?

With only a few days to go until the end of the tax year, time is running for those who are yet to make a decision on what to do with their £20,000 ISA allowance. To get some ideas, we asked the experts at Chelsea how they have positioned their ISAs this tax year and where they believe the opportunities for growth may lie.

Please remember that the value of investments will fluctuate and returns may be less than the amount originally invested. Tax treatment depends on your individual circumstances and the ISA and tax rules can change. Chelsea does not offer advice and so you must manage your ISA yourself.

Darius McDermott, managing director

“I continue to hold the VT Chelsea Managed Aggressive Growth fund at the core of my portfolio with almost 90% of the fund invested in equities.

“But I also like to make occasional satellite investments: smaller contributions to either niche or higher-risk funds. An area of the market I am currently looking at with interest is China. It’s a long-term contrarian play in my portfolio but valuations continue to make the region look cheap and good money can often be made by going where others fear to tread.

“I’d highlight the FSSA Greater China Growth fund run by by Martin Lau and co-manager Helen Chen. Based in Hong Kong, the managers look for well-managed businesses with good corporate governance and have consistently outperformed their sector.

“For those less gung-ho on the contrarian story in China, I would mention the Fidelity Asia Pacific Opportunities fund, which we hold in the Aggressive Growth fund. Manager Anthony Srom adopts a high-conviction approach to investing in this Asian equity fund and currently has 26%* in China alongside 18.5% in Australia and 13% in Korea*. He is a true active manager, who focuses on finding the best companies rather than simply focusing on an industry or theme. His track record of minimising volatility is also impressive.”

Juliet Schooling Latter, research director

“The core of my portfolio is in the VT Chelsea Managed Balanced Growth fund, and that's also were my monthly contributions go. But I always save a bit of my allowance so that I can add a satellite choice or two to the fringes of my portfolio.

“Typically I will also have a bit of regional exposure on the side. This year I think UK offers value and investors will look back in years to come and recognise this is an excellent entry point - especially for UK smaller companies.

“One fund that fit the bill in this area is the IFSL Marlborough UK Micro-Cap Growth fund co-managed by Guy Feld and Eustace Santa Barbara. I’ve also added to Liontrust UK Micro Cap fund from the Chelsea Core Selection. The fund applies the team's proven ‘economic advantage’ investment process to micro-caps - a part of the market that tends to be under-researched and has shown outstanding performance since its launched in 2016.”

James Yardley, senior research analyst

“The VT Chelsea Managed Aggressive Growth fund is my main choice for my ISA portfolio this year. We see value in UK small and mid-cap stocks and recently bought in Slater Growth to take advantage of that. At the start of the year we also increased our position in Polar Capital Global Insurance as insurance premiums are going up and they are benefitting from a higher interest rate environment.

“I would also highlight both Rathbone Global Opportunities and BlackRock Global Unconstrained as two funds within the portfolio that continue to deliver excellent returns.

“Rathbone Global Opportunities has been managed by James Thomson for over two decades and focuses on mid-sized growth companies, a process that has served him well. The BlackRock fund, although relatively new, is backed by some of the most experienced and top-performing equity managers of the past decade and we continue to see excellent returns.”

*Source: fund factsheet, 29 February 2024

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 fund managers and do not constitute financial advice.