Who will hit the heights?

There are a few months to go until the end of the tax year and some people may still be wondering where to invest this year's individual savings account (ISA) allowance. While last year the booming technology sector persuaded thousands of investors to pour cash into tech-specific funds, few people seemed to have understood the risks involved - when the sector plummeted, many got their fingers burnt.

There are a few months to go until the end of the tax year and some people may still be wondering where to invest this year's individual savings account (ISA) allowance. While last year the booming technology sector persuaded thousands of investors to pour cash into tech-specific funds, few people seemed to have understood the risks involved - when the sector plummeted, many got their fingers burnt.

Is this experience likely to affect ISA investor choice in the time left until the beginning of April? After the technology jitters, some may have been totally put off investing in equity ISAs, but the stock market is the place to invest over the long term if you want to get the best returns.

"ISAs will still sell whatever the market conditions," says Ian Chimes, managing director of Credit Suisse Asset Management (UK). "A year without an ISA is a missed opportunity and a win for the taxman."

However, independent financial advisers (IFAs) and fund management houses alike aren't seeing the emergence of any particular investment trends at the moment. "We're not seeing the clear-cut trend we had last year when it was tech, tech, tech," says Craig Whetton, chief executive at IFA Chartwell Investment Management. "There is a lot of interest in broader-based funds, such as international and European funds."

The advantage of global funds is that they invest across a range of sectors, so as well as tech exposure your risk is lessened by exposure to "steadier" sectors. Mr Chimes notes that the upside of single-themed funds is dramatic growth, but the downside "is being tied to one theme when the music stops". He adds: "One of the bigger advantages of global funds is the spread of international markets across numerous sectors. When the problems and the downturns hit one sector, a global themed fund can move elsewhere. With a wider remit, in the future opportunities can be grasped in sectors that, at present, may look out of favour."

If you want a global themed fund, you'll find plenty of choice as the number of funds available has increased significantly over the past year. Investment house Sarasin has pioneered such funds with its Equisar fund. Its move was followed by Invesco's Global Dynamic Theme Fund.

"In the last year everyone's jumped on the bandwagon," says Michael Owen, director of IFA Plan Invest. "For those with a largely UK-based Pep [personal equity plan] portfolio, it's a good idea to globalise, but I'd look at the funds with a track record - such as Sarasin, Invesco or Fidelity."

Mr Owen believes a lot of investors are worried about the risk of various funds on offer, so are going for traditional, conservative options. "Because of the volatility, I think there's a mood of back to basics, and some of the old income funds such as Perpetual High Income, Credit Suisse Income, and Newton Higher Income, have come back into fashion."

Over the past few years, and particularly during the tech boom, such funds were thought too boring by a lot of people. However, they could be well worth considering; they won't give spectacular growth but they are a pretty secure investment with low risk.

One of the main problems faced by those who invested in technology funds last year was that they didn't fully understand the implications of a falling market, but tended to just follow the crowd.

"A lot of people who made choices on their own went in on the back of hype, not really understanding the risk," says Mr Whetton. "If you're not sure, for goodness sake get advice - don't just go for what's heavily advertised."

Jeremy Batstone, head of research at NatWest Stockbrokers, says a lot of people believe that now is a good time to buy shares anyway. The downturn in the market means that shares are cheaper, so if you are prepared to take a gamble, you could pick up some cheap technology shares.

However, other single- themed funds such as healthcare, remain popular. Framlington Healthcare has done well but, as Mr Owen points out, it is very high-risk due to the fact that 50 per cent of the fund is invested in biotechnology companies. A lower- risk alternative would be Schroder's Medical Discovery Fund since 60 per cent of this portfolio is invested in blue-chip pharmaceuticals, though there is still some exposure to the biotech sector.

Wherever you invest your ISA allowance, it is vital you understand the risk involved in different funds and look at it as a medium- to long-term investment. The longer you can invest your money, the greater risk you can afford to take.

* Contacts: Chartwell, 01225 321700; Plan Invest, 01625 429217.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
peopleHowards' Way actress, and former mistress of Jeffrey Archer, was 60
Sport
Chelsea are interested in loaning out Romelu Lukaku to Everton again next season
sport
News
Robyn Lawley
people
Life and Style
Troy Baker and Ashley Johnson voice the show’s heroes
gamingOnce stilted and melodramatic, Hollywood is giving acting in video games a makeover
PROMOTED VIDEO
News
people
News
i100
Life and Style
Phones will be able to monitor your health, from blood pressure to heart rate, and even book a doctor’s appointment for you
techCould our smartphones soon be diagnosing diseases via Health Kit and Google Fit?
News
people
Extras
indybest
Sport
Usain Bolt confirms he will run in both the heats and the finals of the men's relay at the Commonwealth Games
commonwealth games
Life and Style
tech'World's first man-made leaves' could use photosynthesis to help astronauts breathe
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior Investment Accounting Change Manager

    £600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

    BA/PM,EMIR/Dodd-Frank,London,£450-650P/D

    £450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...

    Senior Analyst - ALM Data - Banking - Halifax

    £350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...

    Java developer - Banking - London - Up to £600/day

    £500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...

    Day In a Page

    Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

    The day America’s love of backyard tigers led to a horrific bloodbath

    With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
    Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

    Acting in video games gets a makeover

    David Crookes meets two of the genre's most popular voices
    Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

    Could smartphones soon be diagnosing diseases?

    Health Kit and Google Fit have been described as "the beginning of a health revolution"
    10 best over-ear headphones

    Aural pleasure: 10 best over-ear headphones

    Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
    Save the tiger: The animals bred for bones on China’s tiger farms

    The animals bred for bones on China’s tiger farms

    The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
    A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

    A former custard factory, a Midlands bog and a Leeds cemetery

    Introducing the top 50 hidden spots in Britain
    Ebola epidemic: Plagued by fear

    Ebola epidemic: Plagued by fear

    How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
    Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

    From 'Parks and Recreation' to 'Guardians of the Galaxy'

    He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
    How live cinema screenings can boost arts audiences

    How live cinema screenings can boost arts audiences

    Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
    Shipping container hotels: Pop-up hotels filling a niche

    Pop-up hotels filling a niche

    Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
    Native American headdresses are not fashion accessories

    Feather dust-up

    A Canadian festival has banned Native American headwear. Haven't we been here before?
    Boris Johnson's war on diesel

    Boris Johnson's war on diesel

    11m cars here run on diesel. It's seen as a greener alternative to unleaded petrol. So why is London's mayor on a crusade against the black pump?
    5 best waterproof cameras

    Splash and flash: 5 best waterproof cameras

    Don't let water stop you taking snaps with one of these machines that will take you from the sand to meters deep
    Louis van Gaal interview: Manchester United manager discusses tactics and rebuilding after the David Moyes era

    Louis van Gaal interview

    Manchester United manager discusses tactics and rebuilding after the David Moyes era
    Will Gore: The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series

    Will Gore: Outside Edge

    The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series