With only five trading days left until ISA deadline day, it’s time to start thinking about which instrument you’ll use to put your money to work in this tax-free wrapper. And the tax-free nature of an ISA means that it’s perfect for income investors, but you need to be careful which dividend stocks you choose.
Indeed, picking stocks can be a risky business, even for the professionals. The best way to minimise this risk, and invest in a well-diversified portfolio of dividend-paying stocks is to buy a fund.
Here’s a selection of some of the best income and growth funds on offer. All of these funds are highly rated and managed by some of the City’s best fund managers.
Five of the best
The CF Miton UK Multi Cap Income fund gives investors the chance to benefit from both income and capital growth over the long term. Right now, the fund yields 3.5% and charges 1.6% per annum in management fees. Since launch in October 2011, the CF Miton UK Multi Cap Income fund has returned 76.5% excluding dividends. Including dividends the fund has produced a cumulative return of closer to 100%.
The JOHCM UK Equity Income fund is a pure income fund and currently yields 4.1%. Annual management fees amount to 1.3% any the fund’s top holdings are all FTSE 100 stalwarts. Over the past five years, the JOHCM fund has produced a cumulative return of 82.5%.
The Marlborough Multi Cap Income fund is another fund that targets both income and growth. Just like the CF Miton Multi Cap fund above, the Marlborough fund is not limited to blue-chip shares and as a result, the fund has been able to achieve an impressive level of capital growth over the past three years. The Marlborough Multi Cap fund has produced a cumulative return of 76.5% for investors since 2011. The fund currently supports a yield of 4.1% and the annual management charge is 1.6%.
Rathbone Income Inc aims to achieve above average and maintainable income, without neglecting capital security and growth. The fund has clocked up a cumulative return of 85.4% over the past five years outperforming the equity income benchmark index by 19%. Rathbone’s top holdings include both UK and US shares. The fund currently supports a yield of 3.4% and charges 1.6% per annum in management fees.
Saving the best till last, the Royal London UK Equity Income fund has chalked up the best performance of this group over the past five years. The fund has produced a cumulative return of 101.9% since 2010, currently supports a yield of 3.5% and the annual management charge is 1.3%. Royal London’s top holdings are dividend stalwarts GlaxoSmithKline, HSBC, Royal Dutch Shell and British American Tobacco.
