When you're deciding where to invest your annual Individual Savings Account (Isa) allowance it can be useful to know where the experts favour.
We have asked a string of financial advisers, investment experts and market commentators how they view the outlook, which areas look attractive, and how they plan to invest their own Isas.
It probably won't come as a surprise to hear their views are mixed. While some are planning to take higher risks this year, others are shunning stock markets and focusing instead on cash.
Carl Melvin, chief executive at Affluent Financial Planning, doesn't like second-guessing the market, but suggests UK gilts should be avoided and that European equities look good value for the longer term. On a personal level, he has a long investment horizon and is happy to accept volatility. "I take a very speculative approach and invest in direct shareholdings – which is high risk but can be high reward," he says. "I am invested in new-technology sector stocks such as Arm Holdings, Iomart and Asos, all of which have done very well recently."
Geoff Penrice, a financial planner at Astute Financial Management, believes the recent "flight to safety" has made bonds relatively expensive in comparison to equities. As far as his Isa investing is concerned he prefers to have a variety of exposures.
Rather than choosing an individual fund he will be investing into a portfolio based around his attitude to risk and mainly made up of passive tracker funds to keep costs to a minimum.
"I will invest around 62 per cent into shares, which will be a mixture of UK, developed market and emerging market equities," Mr Penrice explains. "The equity content will have a bias toward small and value companies to give a greater potential for growth."
A further 20 per cent will be in fixed interest, most of which will be international short-dated bonds, as well as a small amount in gilts and corporate bonds for diversification. The remaining 18 per cent will be going into actively managed property and commodity funds.
The financial planner Neil Mumford from Milestone Wealth Management believes a market correction is on the horizon which means the wisest move will be to pick funds that have been cautious to date and have cash to deploy when the time is right.
He is planning to invest in the Aberdeen Asian Income Investment Trust, whose holdings include corporate giants such as HSBC. "I'm taking a five-year view and looking to reinvest the dividends," he explains. "Asia continues to be a powerhouse of growth and looks a compelling, long-term growth story. More and more companies are also paying dividends in that part of the world."
Jason Witcombe, director of Evolve Financial Planning, prefers to put as many personal finance decisions as possible on autopilot, so invests his Isa by monthly debit. This means the only decision he has to make is increasing it when the Isa allowance goes up.
He also invests for the longer-term so the short-term economic backdrop is not a concern and he is comfortable being predominantly invested in equities, with extra allocations towards value and small-cap strategies. "I invest in low-cost equity tracker funds from Vanguard as well as a short-dated bond fund plus UK and overseas value and small-cap equity funds from Dimensional," he says. "These are the same funds that we use for our clients."
Patrick Connolly, a certified financial planner at AWD Chase de Vere, believes the recent improving confidence remains fragile and that we are a long way from solving the global economic problems that have haunted stock markets. As a result, a correction would not come as much of a surprise.
Over the longer term he still believes that risk assets such as equities offer better prospects than perceived safer investments like fixed interest, and insists he's relaxed with the prospect of his investments falling in the short term as he is taking a 20-plus-year view. "I am investing into M&G Global Basics, Old Mutual UK Smaller Companies, Schroder Income and JPM Natural Resources funds," he says. "All of these invest in equities, and provide broad exposure to value stocks, smaller companies and some unloved and, therefore, cheaper areas."
Mark Dampier, head of research at Hargreaves Lansdown, sees equities as virtually the default option at present, pointing out that Europe and Japan are currently the cheapest markets, but also urging investors not to overlook the opportunities that may exist in the UK.
"I have always liked income and it's still a great place to be as even if the market falls dividends are still likely to be fairly good and you'll be way ahead of what you'd get in a cash account," he says. "I plan to put some more money in funds such as Marlborough Multi Cap income."
Philippa Gee of Philippa Gee Wealth Management believes there are still plenty of potential risks for investors and says there is an argument for taking a more cautious approach as not one asset class currently represents either low risk or a real opportunity.
She advises against investors pinning their hopes on just one area, such as equities, and if it's their first Isa investment to consider a multi-asset fund that will provide them with broad-brush exposure to a variety of asset classes.
"The key theme is diversification," she says. "My focus is on dividend-producing funds such as Invesco Perpetual Global Income.
"I'm also looking at smaller companies from a global perspective. Although this picks up the risk it also means you are ticking the diversification box as well."
Andy Gadd, head of research at Lighthouse Group, is feeling a little cautious about the outlook and the potential direction that various investment markets will take in 2013, citing concerns over unknowns such as the political uncertainty in Italy and the sustainability of Chinese growth.
Such a backdrop, he argues, has left him feeling cautious at a time when others, perhaps, are greedier. As a result, his allowance is heading towards the Rathbone Strategic Growth Fund that is managed by David Coombs.
"The fund invests in a wide mix of assets including equities, bonds, private equity, property, commodities and hedge funds, but does not necessarily invest in all of these asset classes all of the time," he says. "Investment weightings are unconstrained by index benchmarks/peer universes."
Over the past year, Darius McDermott, managing director of Chelsea Financial Services, has bought Jupiter European and Aberdeen Global Emerging Markets Smaller Companies, as well as two Japanese portfolios – GLG Japan Core Alpha and Legg Mason Japan.
"I tend to have a slightly higher risk outlook and my portfolio is more skewed to riskier ends of the market," he says. "I'm likely to add to the US next year as its economy continues recovering and I can see decent growth in the US. I also think the dollar will be better than sterling."
Julian Chillingworth, chief investment officer at Rathbones, also likes the look of the United States. "It's got a lot going for it," he says. "An economic recovery is taking place in the medium term, while better energy costs mean the cost of manufacturing is coming down."
In particular, he is keen to have exposure to oil-service companies based in the country, such as Baker Hughes.
"There has been a pull-back in drilling commitments over the last few years but you might well see that picking up again and these firms are a good way in which to participate," he says.
Alec Letchfield, chief investment officer of wealth management at HSBC Global Asset Management, has previously been investing in corporate bonds but he's become less positive in the asset class due to a combination of less-attractive yields and high levels of debt issuance.
He suggests that for most investors the starting point for their Isa investment should be a multi-asset portfolio, albeit perhaps with an equity bias at the moment. As for his own Isa allocation, he expects to put that into equities.
"It will probably be an equity fund because they look the most attractive of the asset classes as valuations are on your side, the macro is improving and M&A (mergers & acquisitions) is picking up, but I'm indifferent as to whether it will be UK or global equities," he explains. "The UK markets are very global these days with a high percentage of their earnings coming from overseas."
Justin Modray, founder of the website Candid Money, believes that emerging markets and commodities both remain great long-term bets, but admits to finding it very hard to get excited by stock markets at present. As a result, he doesn't plan on using his full allocation.
"Markets seem rather over-optimistic given the gloomy economic backdrop, but if you are investing then I'd steer towards healthy dividends to provide some protection against a downturn," he explains.
"I'll just be using my cash Isa allowance this year, in part due to concerns over markets and also because I don't want to tie up that particular tranche of money long term."Reuse content