DIY Investor Magazine
/
March 2014
8
MEASURE TWICE, CUT ONCE
WITH THE ABILITY TO SAVE £15,000 A YEAR, IN ANY COMBINATION OF CASH AND
STOCKS AND SHARES THAT YOU DESIRE AND THE FREEDOM GRANTED LAST YEAR TO
INVEST IN AIM STOCKS, THE USEFULNESS OF NISAs AS A SAVINGS VEHICLE IS MUCH
ENHANCED OVER SAY A 2012 VINTAGE ISA.
SELECTING AN INVESTMENT
COMPANY FOR YOUR NISA
Summer 2014 and the talk is all about NISAs (well in
some circles anyway – most of us are probably thinking
about football, tennis and the weather).
With the ability to save £15,000 a year, in any
combination of cash and stocks and shares that you
desire and the freedom granted last year to invest in
AIM stocks, the usefulness of NISAs as a savings vehicle
is much enhanced over say a 2012 vintage ISA.
But how best to take advantage of the situation?
Banks seem to be slashing deposit rates in anticipation
of a wall of cash heading their way, to the extent
that there is a question mark about whether cash
NISA rates will offer investors real returns and, while
markets are a little off their highs, many do not look
particularly cheap. Fortunately, with the change in the
rules about including AIM stocks in ISAs/NISAs, savers
now have access to an enormous variety of investment
companies, many of which set out to deliver returns
that are uncorrelated with equity markets and many of
which aim to generate decent income and some capital
growth.
As ever, your choice of fund is going to depend on your
individual circumstances. At one extreme, Global funds,
because their portfolios are diversified by geography
and, often, also by asset class, offer a good “one-stop-
shop” for an investor looking for a core holding for their
portfolio.
Look carefully at what they hold however, while some
aim to capture the best investment opportunities
available across the globe, others still have a strong bias
to a single country (often the UK). Looking at the Global
sub sector today, nine funds have delivered net asset
value returns of more than 10% per annum over the last
ten years.
At the other, we have seen dramatic growth in recent
years of specialist funds, often in response to the demand
for income. Bear in mind that the FCA believes not every
fund is deemed suitable for retail investors. Among
those that are, the infrastructure sectors have proved
particularly popular with investors as the offer yields of
c5% and some RPI linkage in the income generated by
their portfolios. Open-ended funds are just not suited to
JAMES CARTHEW
HEAD OF RESEARCH &
DIRECTOR, MARTEN & CO
