Savers have just ten days to use up this year’s £20,000 Isa allowance — so where should you invest for the best returns?
Money Mail analysis of the best-selling Isa investments found star fund managers such as Terry Smith and Neil Woodford are proving most popular among savers as the tax year comes to an end on April 5.
But experts say following the crowd isn’t necessarily the smartest option at this time of year.
Bubbling: Fevertree Drinks, which makes tonic water and ginger beer and has seen its share price rocket more than 17 times since it listed on the stock exchange in November 2014
Laith Khalaf, senior analyst at Hargreaves Lansdown, says: ‘We always see a final flurry of activity at the end of March as investors look to make use of their Isa allowances — and sometimes they can find themselves short of time to choose their investments.
‘In these circumstances it’s tempting to simply go for well-known names, but sometimes talented fund managers lie off the beaten path, too.
‘Importantly, once you’ve put your money in the Isa, you don’t have to invest it straight away — so you can take your time over picking funds and make sure you get a good spread of skilful fund managers running your portfolio.’
The most bought funds through Chelsea Financial Services are Terry Smith’s £14 billion Fundsmith Equity fund and Neil Woodford’s flagship Woodford Equity Income fund.
The two funds also feature in the top ten most popular investments made through fund supermarket A.J. Bell.
Mr Smith and Mr Woodford have attracted a loyal following after building stellar investment track records.
Fundsmith Equity has turned £10,000 into £22,330 over the past five years by investing in huge brands such as Microsoft and PayPal. Mr Smith rarely changes his picks. The return compares to £15,620 on average for rival global funds.
Mr Woodford made a name for himself investing in big UK businesses such as cigarette maker Imperial Brands and up-and-coming names such as online estate agent Purplebricks.
He left Invesco Perpetual to launch his own fund management group in 2014. His flagship Equity Income fund has struggled in recent months and is down 13 per cent over the past year, but is still popular with investors who expect him to turn a corner.
Mr Khalaf says: ‘Investors might be surprised at the gems they can find by looking at lesser-known names.’
In demand: Fund managers such as Terry Smith and Neil Woodford (pictured) are proving most popular among savers as the tax year comes to an end on April 5
Jason Hollands, managing director at Tilney Bestinvest, is looking to the fast-growing economies of emerging markets such as Brazil, India and China to use up his Isa allowance.
He likes the Fidelity Emerging Markets fund, which has turned £10,000 into £16,200 over the past five years.
Among its largest investments is Chinese dairy company Mengniu — a leading maker of baby formula.
Parents in the country are particularly picky about which baby formula they use after a contamination scandal in 2008 which killed six children, and Mengniu has established a solid reputation.
Another of his top picks is Lindsell Train Global Equity, which backs businesses across the world that make some of our favourite products.
One of these is Unilever, which makes PG Tips teabags and Hellman’s Mayonnaise and sells more than one billion Magnum ice creams every year.
The fund has turned £10,000 into £21,600 over the past five years. Darius McDermott likes the JOHCM Asia ex Japan fund, which finds firms in Taiwan, China and South Korea and has turned £10,000 into £14,440 over the past five years.
One of its biggest investments is Indonesian convenience store chain Alfamart which has more than 10,000 stores across southeast Asia.
Some investors are avoiding funds which focus on the UK because they are worried about the Brexit negotiations having a negative impact on the stock market.
For example, many of the most popular funds among Hargreaves Lansdown customers invest overseas, with First State Asia Focus second on the list, Crux European Special Situations third and JP Morgan Emerging Markets fifth.
But Mr Khalaf says that now could be a good time to back out-of-favour UK funds while share prices are cheaper.
He likes Standard Life UK Smaller Companies, which would have doubled £10,000 to £19,860 over the past five years.
It invests in Fevertree Drinks, which makes tonic water and ginger beer and has seen its share price rocket more than 17 times since it listed on the stock exchange in November 2014.
Mr McDermott likes the Livingbridge UK Micro Cap fund, which specialises in small, fast-growing British businesses such as sportswear store Foot-asylum.
The up-and-coming retailer was launched by one of the founders of rival High Street group JD Sports. The fund has turned £10,000 into £23,930 over the past five years.
Mr McDermott says: ‘Investors shouldn’t make the mistake of just buying what everyone else is buying — you need to invest in a fund that fits your own needs and goals. The important thing is to take advantage of your Isa allowance because it’s use it or lose it.’