Isa tips 2018: Financial advisers name their investment trust tips for all ages

With the end of the tax year drawing near here are some last-minute investment trust ideas.

With the end of the tax year drawing near the Association of Investment Companies (AIC) has collated investment company Isa recommendations from financial advisers for all ages.


Dennis Hall, CEO and chartered financial planner at Yellowtail Financial Planning, says that with plenty of time on their side, investors in their 20s and early 30s can afford to take a few knocks along the way in the pursuit of higher returns. ‘The secret is to buy well and hold. I’m torn between investing into a high conviction investment company like Lindsell Train, or into something more diversified like Scottish Mortgage – personally I hold both and maybe that’s the answer,’ says Hall.  

Downing Strategic Micro Cap was picked out by Tim Cockerill, investment director at Rowan Dartington. ‘Small businesses have the potential to grow significantly and the manager Judith Mackenzie is very experienced in this space.  This is definitely one for the long term, so ideal for patient millennials,’ he says.  

Jim Harrison, Director at Master Adviser, chose two investment trusts with young managers at the helm. He named Invesco Perpetual’s Keystone, recently handed over by Mark Barnett to James Goldstone, as his growth pick. For income (which can be reinvested by those who don’t need the extra cash, to benefit from compounding whereby those dividends in turn produce further payouts), he favours Lowland, co-managed by Laura Foll, who works alongside James Henderson. 

‘Age or youth doesn’t define the manager, but I look for long-term continuity, and with my recommendations there is potential for the managers to be at the helm for a long time,’ he adds.

Millennials, though, may prefer to outsource the decision-making rather than self-select trusts themselves. Neil Mumford, chartered financial planner at Milestone Wealth Management Limited, says Witan would fit that bill. ‘This is an ideal investment for millennials saving on a monthly basis, benefiting from pound-cost averaging and the re-investment of a rising dividend which has increased in each of the last 43 years. We have recommended this investment company for many clients’ children and have been delighted by the returns,’ says Mumford. 

Middle years – going the distance

Investors in their 40s and early 50s are beginning to see retirement on the horizon, points out Hall. As a result, their willingness to take knocks begins to reduce as the emphasis starts to tilt from all-out growth towards the preservation of what they’ve gained. 

He adds: ‘Arguably the portfolio will run for another 40 or more years, so my millennial recommendations would equally apply. But if they wanted to take it down a notch I would invest in Monks, a diversified global investment company managed by Baillie Gifford. Alternatively, I’d suggest Bankers, another globally diversified investment company managed by Janus Henderson.’ 

Bankers is also Mumford’s choice. He points out for savers in those middle years who are still looking for long-term growth prospects and for an investment company that can deliver both growth now and perhaps rising income later, Bankers is the perfect answer. ‘Focusing on growing capital returns via a global mandate, it also has an enviable record of increasing dividends for over 50 years,’ he adds. 

Harris suggests looking at smaller companies, as at this stage investors still have a fairly lengthy investment horizon. ‘It is hard to see beyond Harry Nimmo’s Standard Life UK Smaller Companies, but I’d recommend taking a look at Neil Hermon’s Henderson Smaller Companies; impressive total return, surprising strong dividend for a smaller companies growth fund and available at almost a 9 per cent discount,’ says Harris. 

Cockerill also favours a trust that invests outside of the large-cap names that are found in the FTSE 100 index. He picks out Mercantile, which invests in medium and smaller-sized companies. He adds: ‘It was established back in 1884 and is now £2.1 billion in size, making it one of the larger investment companies. It has an excellent record and is of course backed up by the resources of JP Morgan.’ 

Retirees – employing the return

For a post-retirement pension portfolio investors will be ideally looking to secure inflation-proofed income. Mumford argues those in that camp should look no further than Scottish American, which has racked up 38 consecutive years of dividend increases. ‘Impressively, this investment company has continually delivered a rising dividend income, which has increased by 46 per cent over the last 10 years (well above inflation). Although not for the faint-hearted retiree due to its complete exposure to global equity markets, it will pay those who are willing to stick with it through good and bad market conditions,’ he says.  

Cockerill favours Merchants, which has a high yield of 5.2 per cent and has increased dividend for the last 35 years on the spin. He adds that the trust has substantial reserves, which he says will enable the trust’s progressive dividend policy to be maintained.

JPMorgan Claverhouse is Harrison’s choice.  The trust has increased its dividends for 45 years, and according to Harrison is in a healthier position than peers to continue paying dividends. 

Hall, however, argues that retirement doesn’t preclude investors from any of the recommendations given to younger investors. He points out, though, that older investors’ objectives tend to shift toward lower volatility and greater income. He adds: ‘Sometimes there’s a desire for a higher home bias. For a globally diversified investment company, I’m again choosing Bankers and for UK bias I would choose City of London for its low charges and consistency of income.’

Keep up to date with all the latest financial news and investment tips by signing up to our newsletter. Email subscribers will also receive a free print copy of Money Observer magazine.  

Subscribe to Money Observer Magazine

Be the first to receive expert investment news and analysis of shares, funds, regions and strategies we expect to deliver top returns, plus free access to the digital issues on your desktop or via the Money Observer App.

Subscribe now

Add new comment