Investing in a stocks and shares ISA is one of the top ways to build a portfolio for the future in the UK. The tax efficient nature, and the long-term intention will more often than not prove to be a much better asset than holding any spare savings in cash over the years.
Once you have decided that the stocks & shares ISA is the right product, the next question is which provider do you look to? There are of course options with most local banks, and if you hold an account with a UK high street bank, chances are they will have an ISA product of sorts. Not all of them however will have access to international stocks, or to quite as many funds as others.
So how do you choose? Not easily is the most straight forward answer. There are fees to consider, market access types, whether they allow transfers in from other providers, aswell as many other factors. Such is the nature of investing, that what works for one, may not work for another.
With that being said, below are a few providers of ISA products in the UK that have passed various trust tests, and will broadly prove suitable to most who are simply looking for a good range of markets, with a good fee structure.
Fineco Bank
Fineco Bank is regulated by the Bank of Italy and Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA). It specialises in Stocks and Shares ISAs and makes it easy for clients to put money into a range of investments, including Funds, Shares, ETFs and bonds.
Fineco has thousands of funds to choose from for your ISA and offers passive and actively managed products from a range of highly regarded fund managers.
One of the plus points of the Fineco service is the range of research and analysis tools it provides to help you choose the right asset for your ISA account. The PowerDesk platform is packed full of powerful software tools and the Fineco App allows you to keep on top of your investments using handheld devices.
- Zero platform fees for the first year
- Capped at 0.25% thereafter
- Zero withdrawal fees
- No set-up costs
- No minimum opening balance amount
Our pick of the ISAs on offer at Fineco is the M&G North American Value FAM Fund
One of the best ISA funds is the M&G North American Value FAM Fund, which invests mainly in shares of US and Canadian companies. Launched in 2018, it has consistently delivered solid returns in recent years.
The fund applies a ‘value strategy’, so it invests in companies deemed to be currently undervalued. It has a mandate to invest in companies of all sizes and in a range of sectors. Some of the sleeping giants of the North American corporate world could well be sounded out by the M&G investment team.
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IG
IG is a big player in the online trading and investing sector. In total, it offers more than 17,000 markets in a range of instruments ranging from ETFs to Options. Leveraging off existing services, and its 40 years’ operating as a trusted broker, the firm has developed a range of ISAs, which is hard to beat.
Exchange Traded Funds are popular among ISA investors as they offer a chance to focus investment in a particular sector or country. IG’s offering of more than 6,000 ETFs means that whatever area of the financial markets you want to back, IG has it covered.
Source: IG
If you’re looking to split your ISA allowance of £20,000 across different strategies, then it’s worth noting IG supports trading in 8,000 different equity markets. The research and analysis on each of the names goes down to a granular level, including broker ratings, trader sentiment and balance sheet financials.
There is zero commission on share dealing in US markets, making it easy to bring some of the biggest stocks in the world into your ISA. Apple, Microsoft, Proctor & Gamble are popular targets, but they also provide markets in smaller growth stocks which might (or might not) be a good side-bet in terms of a buy-and-hold position.
Source: IG
IG isn’t the cheapest in terms of running costs, but skimping on fees does run the risk of being ‘penny wise and pound foolish’. You get what you pay for and the first-rate support structure and range of markets provide all the tools you’ll need to make an informed decision about which long-term investment is best for you.
Our pick of the ISA compatible instruments on offer at IG come from the Small Cap and Tech Stock sectors.
Filters on the IG Equity market monitor allow you to create a short-list from the US Tech 100 and UK Small Caps markets. Trying to pick potential big-winners is a high risk-return strategy, but the number of equities on offer allows you to build a portfolio of different names so that you can mitigate against single-stock risk.
Source: IG
Established investment advice would discourage investors from allocating more than a small percentage of their total wealth in these stocks and to be prepared to lose it all. But given that ISAs are designed to support long-term investment, the IG ISA is an ideal home for growth stocks that might come good. If they do, the returns are tax-free.
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Interactive Investors
If you’re new to ISA investing, there is something to be said for using a platform that specialises in outlining what is involved in a clear and transparent way.
Interactive Investors is a well-established brand, but don’t let that get in the way of it making information on its products easy to access.
The fees for holding an ISA account are in line with the peer group, and being ‘flat fees’, don’t increase in size even if your investment performs well. Put simply, this means more of your money remains in your investment position.
The platform also offers clients one free trade per month and if you set up a direct debit for regular trading, there are no fees charged on that service either. For those looking to trade with that amount of frequency, it’s an offer that will prove attractive.
The good news on fees not only extends to new customers. Existing customers can add an ISA to their existing account at no extra cost.
This practical and welcome approach to T&Cs is backed up by one of the widest choices of investments and expert research and analysis tools.
Interactive Investors ISAs are set up to support trading in individual stocks and shares, funds, ETFs and investment trusts. The platform offers stocks and shares ISA performance tables to help you choose. It presents all the information in a straightforward way.
Our pick of the Interactive Investor ISA funds is the Baillie Gifford Positive Change C Acc fund.
The ethical approach to investments captures a current trend, which has slowed in U.S corporates, but remains a topic of interest for many. Taking positions that factor in ecological, employment and corporate governance issues no longer leave you out of pocket and the Positive Change fund continues to produce returns greater than the benchmark Global fund.
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Hargreaves Lansdown
Stocks and Shares ISAs don’t need to be about hitting home runs. With interest rates at record low levels, Investment ISAs that aim to generate a more conservative return are still sought after. For certain investor profiles, the best investment ISA is a Total Return fund, which selects assets designed to offer a return but also diversify risk.
The instruments in a Total Return fund can still include equities, especially those that have a reputation for paying dividends.
The price of the underlying stock still fluctuates, but the dividend can be fed back into your account as extra shares, which means your position snowballs. This type of reinvestment has historically been the secret to maximising returns. A lot of high-yield stocks are large-cap, blue-chip stocks, which offer a degree of security due to their critical mass and long-established business models.
Other asset groups which might be found in a Total Return fund include bonds, commodities and currencies. The fund manager looks to beat but not break the market by spotting and capitalising on long term macro trends.
Allocating some of your Investment ISA allowance to a strategy that provides some long-term stability can balance out higher risk positions. With some analysts forecasting that inflation or even stagflation could return to the global economy, having some funds allocated to a more conservative approach could be a good idea.
Our pick of the Hargreaves Lansdown Total Return ISA funds is Troy Asset Management’s Troy Trojan.
As the purpose of a Total Return fund is to offer steadier returns, there’s no need to search out one offering quirky features. The Troy Trojan fund is a classic Total Return fund that aims to generate consistent returns over the long-term. It invests in equities, corporate debt, forex, precious metals, money market instruments and government bonds.
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There are many other providers out there that might prove to be exactly what you are looking for, if the above do not hit the mark. Those such as eToro, having recently established an ISA product could be one; whilst your existing bank could also be an option. Whichever provider you choose, take your time, and try to get it right the first time. If you don’t, you can always look again in future, and switch your funds from one to another when the time is right.
