7 fund ideas for your ISA or SIPP

The last few days of the tax year are among the most popular for ISA and SIPP investors. So, if you tend to leave it to the eleventh hour, you’re not alone. Last year one Fidelity customer had just two minutes to beat the deadline - waiting until 11.58pm on 5 April to invest their whole £20,000 ISA allowance.

One reason we tend to put it off is because we simply don’t know what to invest in. So, we’ve put together some suggestions. Whether you want to invest to beat inflation, seek out some stability in cash, invest with an eye on ‘next gen’ trends or just keep it low-cost, here are some ideas for you.

The inflation buster

When it comes to beating inflation then a fund with a solid record of paying dividends is a must.

Fidelity Global Dividend Fund is one such option. This fund invests primarily in companies across developed market regions such as the US, Europe, UK, Japan and Australasia. One of Tom Stevenson’s fund picks for 2024, the manager of the fund uses a bottom-up approach to invest in companies across a variety of sectors and geographies - offering a healthy dividend yield and potential for capital growth.

Another benefit of this fund is that it manages risk more conservatively. The manager focuses on companies with predictable cash flows and simple business models, with little to no debt on their balance sheets - a great technique to manage volatility. Manager Dan Roberts’ long equity investing experience means he has an extensive pool of company researchers that can help guide his investments. His focus can, therefore, be on selecting the best ideas that the analysts provide.

This fund is a useful addition to any portfolio seeking a combination of growth and income. Investors will need to invest for the long term (ten years or more) and the fund should be seen as one of the riskier allocations within a diversified portfolio.

More on the Fidelity Global Dividend Fund

The future-focused one

Among the top 10 best-selling ISA funds on Fidelity Personal Investing this year, is the Fidelity Global Technology Fund. The most popular actively-managed fund on the top 10, this fund targets three areas: growth companies with disruptive technologies, more cyclical businesses with stronger balance sheets and special situations that are either undervalued or expected to benefit from a forthcoming situation or event.

Being actively managed, it gets round the severe concentration risk suffered by indexed technology funds. The fund’s largest holdings as of March 2024 are: Microsoft (5.1%), Taiwan Semiconductor (4.6%) and Apple (4.1%).

More on the Fidelity Global Technology Fund

The cash option

With interest rates remaining at the highest they have been for some time, cash funds have become popular with investors. And for good reason. Following increases in the Bank of England’s Bank Rate since December 2021, cash or money market funds now offer an appealing combination of safety and income.

No surprise then that this year’s top 10 best-sellers among ISA investors include two cash funds - the Fidelity Cash Fund and the Legal & General Cash Trust.

Like many money market funds, the Fidelity fund, which is one of Tom Stevenson’s four fund picks for 2024, aims to produce a return that matches or exceeds the Sterling Overnight Index Average (SONIA). The SONIA rate is 5.19% at the time of writing.¹

Similarly, the Legal & General Cash Trust takes a conservative approach to investing in money markets and features on our Select 50 list of recommended funds.

More on the Fidelity Cash Fund

More on the Legal & General Cash Trust

The low cost one

If cost is key, then as a passive fund Fidelity Index World Fund is, by nature, low-cost and also low maintenance, yet highly-diversified. So no surprise then that it takes top spot for ISA and SIPP purchases this year, confirming that investors are sold on the idea of a diverse markets exposure at minimal cost.

This fund tracks the MSCI World Index converted back into sterling. It has an ongoing charge of just 0.12%, so offers an attractive way of diversifying an investment portfolio composed mainly of UK shares.

Meanwhile, the Fidelity Index UK Fund offers a popular route to investors seeking home market exposure. It tracks the FTSE All-Share Index on a net total return basis, so provides a good exposure to all the UK’s listed blue chips, as well as second-tier mid-caps and some smaller companies too.

Or if you want to add some US exposure to your ISA, then the Fidelity Index US Fund is a popular, low-cost way to track the S&P 500.

As well as investing in the UK and Europe, this fund also offers some exposure to emerging markets in Asia and small doses of Latin America and the Middle East. Top holdings include household names like Apple, Microsoft, Amazon and Google-owner, Alphabet.

More on the Fidelity Index World Fund

More on the Fidelity Index UK Fund

More on the Fidelity Index US Fund

Source:

¹ Bank of England database, 26 March 2024

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. Select 50 is not a personal recommendation to buy or sell a fund. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Eligibility to invest in a SIPP/an ISA and tax treatment depends on personal circumstances and all tax rules may change in the future. You cannot normally access money in a SIPP until age 55 (57 from 2028). The Fidelity Global Dividend Fund invests in a relatively small number of companies so may carry more risk than funds that are more diversified. There is no guarantee that the investment objective of any Index Tracking Sub-Fund will be achieved. The value of shares in the Fidelity Cash Fund and the L&G Cash Trust may be adversely affected by insolvency or other financial difficulties affecting any institution in which the fund's cash has been deposited. An investment in a money market fund is different from an investment in deposits, as the principal invested in a money market fund is capable of fluctuation. The Key Investor Information Document (KIID) for Fidelity and non-Fidelity funds is available in English and can be obtained from our website at www.fidelity.co.uk. his information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.