Best funds to add to your ISA or SIPP before budgeting

Investing in an ISA or a self-invested personal pension (SIPP) is one of the best ways to protect your investment income and capital gains from the taxman. And with a possible tax sweep planned for the Oct. 30 budget, it makes sense to maximize your tax-free annual allowances, if you can.

But which funds or stocks are worth adding to your portfolio? With thousands of funds, ETFs and trusts on the market, this is a tricky question.

Several investment platforms publish best buy lists which can help you narrow down your search for the right funds, whether you’re looking for an ISA, SIPP or another type of investment account. These are useful tools and can greatly simplify your research process.

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“Each sector typically has a dedicated team of half a dozen investment managers who research and monitor available investment options,” says Jason Hollands, managing director of Bestinvest.

“Our investment specialists not only meet with fund managers to understand their philosophy and approach, but also carefully assess the type of market environment that might benefit from a certain manager’s style,” he adds.

Here are some of the best funds to consider according to Bestinvest’s latest list of best funds, released today (October 2). If you’re looking for which funds to avoid, you can also check out the latest Dog Report.

The best funds to invest in

Best UK Equity Funds for Growth

Liontrust UK Growth
Artemis UK Select
The Mercantile Investment Fund

Best UK Equity Funds for Income

Temple Bar Investment Trust
BlackRock UK income
Montanaro income United Kingdom

The best targeted absolute return funds

Personal Property Trust
Alternative to Lazard Rathmore
Diversified absolute return TM Fulcrum

Best bond funds

Artemis Corporate Bond
Invesco Tactical Bond

Best European equity funds

Income from Continental Europe BlackRock
Fidelity European Trust
Liontrust European Dynamics

Best Japanese equity funds

iShares Japanese Equity Index
JPM Japan

Best Asian and Emerging Markets Funds

Templeton Emerging Markets Investment Fund
Pacific Asset Trust

Best US Stock Funds

Premier Miton’s American opportunities
Loomis Sayles US Equity Leaders
GQG Partners US Equities

Best Global Equity Funds

Global Loyalty Index
Brown Advisory Global Leaders
JP Morgan Global Growth and Income Investment Trust

Ethical and sustainable

Guinness Sustainable Energy
Baillie Gifford Head of Global Equity Income
Royal London Sustainable Leaders

Real assets

International public partnerships
3iInfrastructures

Funds Removed from Best Buy List

The following funds were on the best buy list in March 2024, but have since been discontinued:

Janus Henderson Strategic Bonds
Responsible Global Actions CT
Ashmore EM Local Currency Bonds
Amundi Sandler US Equities
CIFC Long/Short Credit
JPM Global Macro Sustainable
REIT LXI
Commercial property in the UK

New best-buy funds added

These newcomers have been added to the list since the last edition:

Liontrust European Dynamics
M&G Japan
BlackRock Gold and General
JPM UK Equity Core
SPDR MSCI ACWI ETF
Xtrackers S&P 500 Equal Weight ETF
Alliance of trust

Should you rush to top up your ISA or SIPP before budget?

Prime Minister Keir Starmer has warned the next Budget will be “painful” as the Government looks for ways to plug a £22 billion black hole in the public finances. This has led to speculation about increased taxes.

One area of focus has been capital gains tax (CGT). Experts have suggested that Chancellor Rachel Reeves could consider raising the CGT rate to bring it in line with income tax. Alternatively, it could consider further reducing capital gains or dividend deductions to raise funds. These amounts have already been reduced to £3,000 and £500 respectively in recent years.

Pensions have also been the focus of attention, with some commentators suggesting that pension tax breaks could be reduced for high earners. Under current rules, savers can contribute up to £60,000 to their pension each year and receive a tax refund at their marginal rate (20%, 40% or 45%). This is a generous allowance and one of the things that makes saving for retirement so attractive.

“Investors looking to make their portfolios as tax efficient as possible are under pressure like never before in the run-up to the first Labor budget on October 30,” Hollands said. “Although investors typically aim to maximize tax deductions at the end of the tax year, many are now spooked by the prospect of major changes to the way savings, pensions and investments are taxed,” he adds.

That said, investors should take the time to conduct thorough research before rushing into purchasing a fund. Any changes introduced by the government usually go through a consultation period and are subject to legislative processes before coming into force.

Plus, if you’re itching to take action before Budget Day, you can always top up your stocks and shares ISA or SIPP with cash at the moment. Once the money is safe from the taxman in the ISA or SIPP package, you can take your time choosing how to invest it as you wish.

Key things to consider when fundraising

While a best buy guide is a useful tool when researching funds, it doesn’t tell you everything you need to know. Before deciding which funds to invest in, DIY investors should carefully consider their goals and asset allocation.

Are you looking to achieve growth or income? How much risk are you willing and able to take? What combination of different strengths can help you achieve this?

If you’re unsure and don’t have much experience with DIY investing, you might benefit from some investment advice. A robo-advisor could be a less expensive option than speaking to a person. This is a popular starting point for many DIY investors.

Once you have your strategy figured out, that’s where a best buy guide comes in.