Do you fancy taking a more aggressive stance with this year's ISA allowance? If so, then it could be worth having a look at funds which invest in either the emerging markets or the racier end of UK equities.
These specialist portfolios aim to generate bumper returns by either focusing on fast-growing regions of the world, such as Eastern Europe and Africa, or on a small number of companies in which they have a high conviction.
For those feeling ultra-confident in their ability to play the stock markets, then you can always opt for Self-Select ISAs, which are effectively wrappers into which you can place any eligible investments, including individual equities.
However, the pursuit of top-drawer returns can come at a price, says Darius McDermott, managing director of Chelsea Financial Services. Remember that many of these products come with substantial health warnings attached.
Only those investors with a high tolerance for risk that can cope with the value of their portfolio fluctuating wildly in response to stock market turbulence around the world – such as we've already seen this year – should consider an aggressive strategy.
"The risk is that you could lose your money, as these are volatile countries and volatile asset classes for various reasons," he explains. "No more than 5 per cent of your portfolio should be in any of these funds, otherwise you're too exposed."
So how do you define an aggressive investment? Well, one type are funds which invest in a part of the world which may be growing rapidly and have an unstable political or economic situation. If everything goes well, funds with exposure to this story can generate fantastic returns, but there are no guarantees.
Another option is to stick to funds investing in UK-listed companies, but whose aims and objectives are to deliver a high rate of return from only buying stocks that are likely to dramatically out-perform the market over a set period of time.
According to Mark Dampier, head of research at Hargreaves Lansdown, whether a position is aggressive or not depends on how you play it. "You can make virtually anything aggressive – it's just down to how much of it you choose to buy," he says.
One of the areas he currently likes is Russia. "I'd argue it's probably the cheapest emerging market around and it's actually fallen back recently which presents an even better buying opportunity," he says. "The market is cheap because Asia has been the big story and people have forgotten about it."
He also favours commodities. "I'd go for the Merrill Lynch Gold & General fund which has done remarkably well over the years," he says. "Currencies can be caused problems by governments, but gold is a final source of value. It's still not that expensive and there's a strong supply/demand dynamic in its favour."
McDermott shares his enthusiasm for Russia but suggests taking a broader approach to emerging markets. "We like funds that can play all the emerging markets, including Africa and the Middle East," he says. "We like the Lazard Emerging Markets in this area, as well as the Allianz RCM BRIC Stars."
Before putting all your allowance into one of these funds, it's important to recognise that you don't have to make a choice between being a cautious or aggressive investor, points out Anna Bowes, savings & investments manager at AWD Chase de Vere.
"Even if you're a moderate risk investor, you can still have a small amount of your portfolio in an aggressive fund as this won't impact much on your performance either way," she says. "You could set up a core of stable funds and then have something a bit racier on the edges to add a little bit of spice to the portfolio."
Even if you are willing to embrace high levels of risk, that doesn't mean you should be too gung-ho with your investment choices, says Dampier.
Whether you opt for a resources fund in Australia that concentrates on fairly obscure small and mid-cap names, or very select portfolios that aim to find hidden value in markets like Africa, it pays to plan.
"There's plenty of scope for you to be aggressive in different areas of the market but you've still got to be sensible about it and not buy something that did phenomenally well last year," he says. "Also, you shouldn't go into them without having an existing portfolio, so it's not really a first-time investment."
McDermott agrees. "I would suggest aggressive funds play a satellite role around a core portfolio – even for the high-risk investor," he says. "It's important not to have too much exposure."
Andy Clark, managing director, wholesale, at HSBC Investments, warns that investors adopting such a stance need to prepare for a rocky ride with the possibility of huge fluctuations in the value of their holdings.
"While chasing high-performance funds can lead to good returns, it can also result in steep losses if the investment strategy is wrong or markets work against that type of investment," he says. "For investors wanting to sleep at night, it makes sense to have a highly diversified portfolio."
One solution, he suggests, is opting for funds that invest in a wide variety of different asset classes. "Amid volatile stock markets, we're noticing highly diversified funds – such as the multimanager fund of funds – that contain a mix of uncorrelated assets are increasing in popularity for this very reason," he says.
If you still want to pursue an ultra-aggressive investment strategy during this ISA season, then what are your options?
Racier UK equities
A popular way of spicing up a portfolio is by investing in UK equity portfolios that are extremely concentrated. These products, often known as focus funds, will invest in a small number of companies – perhaps 20 – which they believe have the best chance of delivering tremendous returns. Having a smaller number of positions means the performance will be affected to a greater degree by the fortunes of individual companies. However, if one has a profit warning, returns could be badly hit.
Another option is so-called "special situations" funds. These will invest in companies that have often been through a difficult period but where there is evidence of a turnaround in fortunes on the horizon.
However, investing in either a handful of companies – or those that have had a chequered past – won't be as safe as putting your money in one of the giants of the blue-chip FTSE 100 index, such as Vodafone, which are far more reliable.
It can also be worth looking at smaller companies – although at the moment they are going through a tougher period having previously been much in favour – because they are not so closely followed by analysts. This means there is the potential to uncover previously undiscovered value.
Funds worth looking at here include Framlington UK Select Opportunities, Artemis Special Situations and Schroder UK Alpha Plus.
Adventurous investors who enjoy dabbling in the stock market can opt for a self-select ISA, which can be accessed through most stock brokers. These products enable you to invest in the shares of any quoted company – as long as they are listed on a stock exchange recognised by HM Revenue & Customs – as well as collective schemes, such as unit trusts.
However, this route should only be considered by the experienced investor who understands markets. Choosing which companies to invest is notoriously difficult – even with a team of research analysts doing the legwork.
The idea behind these investments is putting your money in areas of the world which are developing fast. In recent years China has been among the star performers.
Specialist BRIC portfolios – so-called because they invest in the large emerging areas of Brazil, Russia, India and China – have grown in popularity over recent years, with investors wanting a broad exposure to the story.
You can also go for single-country funds. One of the most popular at the moment is Russia and a way of playing this theme is through the Neptune's Russia and Greater Russia Fund, run by Robin Geffen, which has enjoyed a period of terrific returns.
Launched at the back end of 2004, it had delivered a remarkable 250 per cent return up to the end of December 2007, according to figures compiled by Morningstar. By contrast, the average fund in the UK All Companies sector had returned 44.9 per cent.
Geffen attributes the performance to the country's financial wellbeing as it's been the consumer-related stocks, such as food retailers and brewers, which have been the principle drivers of performance.
"Russian consumers have had three years of pay rises so they're now feeling wealthier and can afford to spend," he explains.
Another fund worth considering for exposure for this reason is Jupiter's Emerging European Opportunities fund.