Although ISAs are open throughout the financial year, as with so many deadlines many investors leave it to the last moment. So I thought this week I might give a few thoughts to the so-called ISAseason, particularly at a time of further stock market volatility caused by such factors as continuing debt problems in Europe and the tragedy of the recent Japan earthquake.
I think I should start with the most obvious asset of all which many people neglect: cash. Many investors don't realise that rather than making a hasty investment decision, they can - if they so wish - put their entire ISA allowance in cash and make a choice about what to do with it later on. Rates on this type of ISA are extremely low but it is a way to ensure you don't lose your ISA allowance because you are nervous of markets. Simply put it in cash and invest it later is the message.
I think ISAs have become rejuvenated since the previous government raised the amount you could invest to £10,200. After 5 April it climbs a further £420 because the allowance is now linked to inflation. I do wonder how long this will continue. Either this government or the next is going to realise just how much tax is being lost through ISAs being taken out and do something about it. So my view is simple: grab it while you can; generally speaking taxes only go one way as politicians of all persuasions just want your money.
Turning to the investment side, I wouldn't necessarily look at your ISAs in isolation. Many of you may well be running personal pensions SIPPs, in which case your ISA should run alongside this. Bear this in mind when you are making your choice so that you don't end up overloading one area too much.
Which brings me nicely on to commodities and emerging markets, an area that I have liked for quite some time but am a little more wary about, at least in the short term.
Commodities in particular have had the most tremendous run over the last few years, and also have a high correlation with emerging markets. So while not suggesting that investors shouldn't have any exposure here, be careful that you don't have your portfolio tilted all in one direction. Note too that the poor performance of UK equity income funds over the last few years had much to do with the fact that they don't buy commodities, mainly because they offer little or no yield.
So if you want to be a true contrarian, look towards the UK income sector for your ISAs. This would include popular favourites such as Neil Woodford's Invesco Perpetual Higher Income fund, where he has a high proportion of his money in the extremely unpopular pharmaceutical sector. I note his passion on this subject reminiscent in 2000 when he said tobacco stocks were being overlooked. Since that date they are up over 500 per cent.
But given all the problems in the world you may wish to look for fund managers which you can buy and hold for the long term. Perhaps one of the best all-weather funds is Artemis Strategic Assets, managed by one of the best fund managers I know, William Littlewood. The fund has the ability to invest just about everywhere, with an additional ammunition of being able to go short when it might be required. It is certainly part of my own portfolio.
My own view is to generally back experienced fund managers rather than spending too much time on asset allocation. In both Europe and the UK we have some highly experienced fund managers. In Europe I would look at Richard Pease, who manages the Henderson European Special Situations fund, and Alex Darwell, who runs the Jupiter European Growth fund.
In the UK, which is often written off by UK investors possibly because we are too close to the economy, I highlight Harry Nimmo at Standard Life UK Smaller Companies, and Richard Buxton at Schroder UK Alpha Plus: both are worthy of any portfolio place.
The UK market is not on a demanding rating, and while I believe the economic recovery will be anaemic at best, I do think there is plenty of value still to be had in many companies. Any decent dips should be seen as buying opportunities and, quite possibly, we are seeing one right now.
Finally if you have left your ISA to the last moment, remember that after 5 April you are entitled to another allowance, and if you can afford to, why wait for another year? Start your 2011-12 ISA after 5 April and make use of the higher allowance. If you have done all your PEPs, ISAs and TESSAs over the years you will now have accumulated £184,800. The accumulation effect of being able to add to your tax-free portfolio every year really can make a big difference in the long run.
Mark Dampier is head of research at Hargreaves Lansdown, the asset manager, financial adviser and stockbroker. For more details about the funds included in this column, visit www.h-l.co.uk/independent