Troy Trojan, Liontrust UK Growth and T. Rowe Price Global Value Equity are all worth considering for investors looking to maximise their ISA allowance before the 5 April deadline, according to Kate Marshall, lead investment analyst at Hargreaves Lansdown.
ISAs are one of the most effective tools for building wealth over time, as they shield investments from income tax and capital gains tax. Savers can deposit up to £20,000 into either a stocks and shares ISA or a cash ISA.
“A well-constructed stocks & shares ISA can combine global growth potential, resilience during more challenging markets and exposure to areas that may currently be out of favour but positioned for recovery,” said Marshall.
T. Rowe Price Global Value Equity falls into the first camp, offering investors broad market exposure by investing in out-of-favour stocks.
“Global equity funds often form the backbone of long-term portfolios. Within global equities, value investing – focusing on companies that appear undervalued relative to their long-term prospects – lagged growth investing for several years. However, investment styles tend to move in cycles,” said Marshall.
“Should markets shift towards a more fundamentals-driven environment or if higher interest rates persist and weigh on highly valued shares, value investing could see renewed interest.”
Managed by Sebastien Mallet, the fund has been a top-quartile performer in the IA Global sector over one and three years and has beaten the MSCI World during both periods.
Performance of fund vs sector and benchmark over 3yrs
Source: FE Analytics
Launched in 2012, the portfolio has also beaten the MSCI World index since inception, although it is slightly behind over the past decade.
T. Rowe Price Global Value Equity fund blends traditional ‘deep value’ opportunities with higher-quality businesses that are temporarily undervalued, said Marshall, which makes for a more balanced portfolio than some value peers.
“While a notable allocation remains in the US, reflecting the breadth of that market, the fund also invests across other developed regions such as the UK, Japan and Europe, and can allocate up to 10% to emerging markets,” she said.
“For investors whose portfolios have become heavily tilted towards US growth stocks or large technology names, a global value allocation could provide useful diversification.
Staying with equities, those looking for a more concentrated bet on undervalued companies could consider Liontrust UK Growth. While the fund is a growth portfolio, it invests in UK mid- and small-caps, which have been strongly ignored by investors in recent years.
In addition, the quality-growth style used by managers Matthew Tonge, Victoria Stevens and FE fundinfo Alpha Manager Anthony Cross has also fallen out of favour with investors.
The team implements its ‘Economic Advantage’ process, which looks for companies with durable competitive strengths that can support above-average profitability over the long term, looking for characteristics such as strong balance sheets, resilient cash flows and sustainable competitive positions.
“Although the fund has historically tended to lag in rapidly rising markets, its quality bias has meant it has tended to hold up better during downturns. If markets begin to refocus on fundamentals or if economic uncertainty persists, high-quality companies could regain favour,” said Marshall.
This will need to happen, however, as the fund’s track record in recent years has underwhelmed; it sits in the bottom quartile of the IA UK All Companies sector over one and three years.
These short-term performance figures have also weighed on its previously strong long-term figures, with the fund now in the third quartile of the peer group over the past decade.
Performance of fund vs sector and benchmark over 3yrs
Source: FE Analytics
“For patient investors willing to take a long-term view, exposure to high-quality UK businesses could offer both recovery potential and resilience,” said Marshall.
Lastly, for the more risk-averse, Troy Trojan is a strong option as its focus on capital preservation tends to serve investors well during uncertain times.
Managed by Alpha Manager Sebastian Lyon and co-manager Charlotte Yonge, the fund invests in four major categories: quality-growth, large-cap equities, government bonds, gold and cash.
Returns may look relatively uninspiring over the short, medium and long-term, as markets have generally risen over the past decade. However, in difficult years, such as 2018 and 2022, this fund has risen to the top quartile of the IA Flexible Investment peer group.
Performance of fund vs sector and benchmark over 10yrs
Source: FE Analytics
“For investors seeking moderate long-term growth with an emphasis on resilience, the fund may help cushion portfolios during more volatile periods,” said Marshall.