Looking for ISA investment ideas? Here are 9 suggestions from a leading ISA provider

Are you struggling to choose your ISA Investments? Here are three stocks, investment trusts and funds selected by the analysts at Hargreaves Lansdown.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Piggy bank rocketing skywards

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

High inflation, rising interest rates and war in Ukraine have taken their toll on global stock markets in recent weeks. With two weeks left to use this tax year’s ISA allowance, investors may be wondering whether to sit out the current market volatility.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, advises that “Even with the current market uncertainty, it’s still important to use your ISA allowance to protect your money from tax.” She also comments that “it’s more important than ever to make sure you have a diversified portfolio.”

With that in mind, the analysts at Hargreaves Lansdown, one of our top-rated ISA providers, have picked three stocks, investment trusts and funds for ISA investments. So, let’s take a closer look at their investment ideas.


Which ISA stocks did Hargreaves Lansdown select?

1. Lloyds Banking Group

Lloyds features regularly amongst the most-traded shares after doubling in its share price over the 18 months to December 2021.

Yesterday’s interest rate hike should benefit banks. Sophie Lund-Yates notes that “As a traditional lender, Lloyds is set to feel the benefit of rising rates more dramatically than those that have bigger sources of alternative income.”

Lund-Yates also highlights that Lloyds has “an impressively low cost to income ratio, making it more resilient in tough times”.

2. Microsoft

Microsoft rewarded shareholders with a 430% increase in its share price from 2016 to 2021. However, this was followed more recently by a 14% fall.

Sophie Lund-Yates comments that “There aren’t many businesses that can say they make software the world doesn’t know how to live without.” She adds that Microsoft’s “traditional software sales are a cash cow”.

Other strengths she points out include Microsoft being one of the few technology companies to pay dividends, the recent expansion of its cloud business and the impact of its pending acquisition on gaming revenues.

3. Smith & Nephew

After years of growth, the share price of Smith & Nephew hit the buffers in late 2019 due to a fall in profits. And profits took a further hit during the pandemic after delays to hip and knee replacements.

However, Sophie Lund-Yates believes that the backlog in elective surgery “should offer a strong tailwind for Smith & Nephew over the next few years.” She also comments that “the shares could rerate substantially if Smith & Nephew can protect its new lower cost base.”

Which ISA investment trusts were selected?

1. Personal Assets Trust

Personal Assets Trust invests in a variety of assets to provide stability in a stock market downturn. Kate Marshall, lead investment analyst at Hargreaves Lansdown, comments that fund manager Sebastian Lyon “aims to grow investors’ money steadily over the long run, while limiting losses when markets fall”.

This is backed up by recent performance. Personal Assets Trust has delivered a small return of 1.5% in the past six months, compared to a -3.0% loss for the sector, according to Trustnet.

2. Bankers Investment Trust

Bankers Investment Trust aims to deliver capital and income growth and has achieved a 56% return over the last five years, based on data from Trustnet.

Kate Marshall comments that it’s provided an impressive “55 years of consecutive dividend increases”. And she believes that the trust “could add some global diversification to an income-focused portfolio”.

3. Aberdeen Asia Focus

Aberdeen Asia Focus has a strong track record, achieving a top-quartile return of 38% in the last five years, according to Trustnet. After a recent fall in price, it’s currently trading on a discount of nearly 16% against net asset value.

Kate Marshall believes it “could help diversify a global investment portfolio”. But she warns that “the combination of younger, smaller businesses with exposure to emerging markets makes the trust a higher-risk option”.

Which ISA funds did Hargreaves Lansdown pick?

1. Troy Trojan

Troy Trojan is a more defensive fund, aiming to deliver modest growth while protecting against a downturn. Kate Marshall comments that “a total return fund could be a good choice” in volatile markets.

Trustnet reports that Troy Trojan delivered an annual growth rate of 7%-12% from 2019 to 2021. But it’s also limited investors’ downside, increasing by 1% against a sector loss of 5% in the last six months.

2. Legal & General Future World ESG Developed Index

This fund is one of the new breed of sustainable investments, tracking the performance of the developed markets’ ESG index. It’s a relatively new fund, delivering a return of 11% in the last year, according to Trustnet.

Kate Marshall comments that the fund “could be a good addition to a broader investment portfolio aiming to deliver long-term growth in a responsible way”.


3. ASI Asia Pacific Equity 

ASI Asia has been a mid-table performer over the last few years, delivering a three-year return of 25% according to Trustnet.

Kate Marshall points to the predicted growth in domestic consumption in Asia Pacific, which is “helped by a young and growing population and rising wealth”. But she also notes that “younger economies mean the risks are greater and more volatility should be expected”.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Personal Finance

Note paper with question mark on orange background
Personal Finance

Should you invest your ISA in a model portfolio?

Which model ISA portfolios offer both high performance and low fees? Hargreaves Lansdown, Interactive Investor and AJ Bell go under…

Read more »

Economic Uncertainty Ahead Sign With Stormy Background
Personal Finance

Is it time to exit emerging markets investments?

Investors may well be sitting on losses from emerging markets funds. Is it worth keeping the faith for a sustained…

Read more »

Personal Finance

Share trading? Three shares with turnaround potential

Share trading has been difficult in 2022, but which companies have turnaround potential? Jo Groves takes a closer look at…

Read more »

Man using credit card and smartphone for purchasing goods online.
Personal Finance

Revealed! Why Gen Z may be the savviest generation when it comes to credit cards

New research reveals that Gen Z may be the most astute when it comes to credit cards. But why? And…

Read more »

Environmental technology concept.
Personal Finance

The 10 best-performing sectors for ISA investors

The best-performing sectors over the past year invested in real assets such as infrastructure, but is this trend set to…

Read more »

Road sign warning of a risk ahead
Personal Finance

Recession risk ‘on the rise’: is it time for investors to worry?

A major global bank has suggested the risk of a recession in the UK is 'on the rise'. So, should…

Read more »

pensive bearded business man sitting on chair looking out of the window
Personal Finance

1 in 4 cutting back on investments amid cost of living crisis

New research shows one in four investors have cut back on their investing contributions to cope with the rising cost…

Read more »

Image of person checking their shares portfolio on mobile phone and computer
Personal Finance

The 10 most popular stocks among UK investors so far this year

As the new tax year kicks off, here's a look at some of the most popular stocks among UK investors…

Read more »