£20,000toinvest? Here’s how to help reduce your risk

ISAS are an investment for all seasons — encouraging a savings habit when we are young, providing security in middle age and offering tax-free income when we retire.

So what’s worth looking at for your £20,000 allowance if you’re investing before the end of the tax year on April 5?

I asked financial advisers for ideas covering three scenarios: the lump sum investor who’s concerned about Brexit uncertainty; the retired person who wants to generate a long-term income; and the younger investor who is willing to leave their money a long time and can afford to take a bit of a punt.

Ryan Hughes, head of active portfolios at AJ Bell, says: ‘ Even if you’d rather not make investment decisions until more is known about the Brexit outcome, you can still move the money you want to invest into your Isa before April 5, where it can sit until you feel ready to invest.’

However, he adds: ‘Markets are a bit jittery, but if there is a breakthrough in Brexit negotiations, things could stabilise; and, if you are sitting on cash, you could miss out on any improvement in share prices.’

Among the options he suggests are the Janus Henderson UK Absolute Return, which has a flexible approach that ‘could be useful if there is a period of extended market volatility’.

It’s not a cheap fund, but Mr Hughes argues that if the managers are able to deliver positive returns when the market is down, they will have earned their fees. Or there’s Newton Global Income, where experienced manager Nick Clay concentrates on large companies offering a dividend yield (that’s the income as a percentage of the share price) that is 25 pc greater than the FTSE World Index.

A third option is Polar Capital Global Insurance. ‘Insurance companies have a great ability to generate cash regardless of the economic environment, as we all know from our ever-increasing premiums,’ Mr Hughes says.

For a more UK-based option, Troy Trojan Income is paying a yield of more than 4 pc. ‘Should Brexit take a turn for the worse, this fund may offer some protection from any sharp falls in the UK market,’ says Mr Hughes.

If you’re looking to boost your retirement income, Tracy Zhao, investment research analyst at The Share Centre, has three offers, starting with First State Global Listed Infrastructure, which pays just under 3 pc.

‘Infrastructure investing is generally lower in volatility when compared to other sectors. It has returned a reliable yield of between 3 to 4 pc,’ she says.

LF Miton UK Multi Cap Income pays around 4.5 pc, and has two respected managers, Gervais Williams and Martin Turner, renowned for stock selection for more than 60 years’ combined.

The fund typically holds between 120 and 160 companies. About 45 pc is invested in small FTSE AIM and FTSE Small Cap companies, and about 22 pc in large FTSE 100 companies.

‘Recently, the managers have moved the portfolio to a more defensive posture,’ adds Zhao.

Thirdly, Rathbone Ethical Bond pays 4.2 pc. ‘This fund provides a regular, above average income through investing in a range of bonds and bond market instruments that meet strict ethical and financial criteria,’ she says.

But what if you’re younger and want something a bit livelier for part of your allowance?

Ben Yearsley, director of Shore Financial Planning, said he would look at splitting £10,000 two ways. ‘I’d have an Asian/emerging market fund and then something like a higher-risk global fund. Both will be volatile and, therefore, you have to buy and ignore it when it inevitably falls in value. Buy for the next decade or more!’ urges Mr Yearsley.

‘I’m a big fan of these markets for higher-risk, long-term investors. They still look cheap, and growth is better long term.

‘Growing middle classes, young and increasing populations and lower debt — all these are reasons to buy.’

First State Asia Focus is a broad-based Asian fund, while Lazard Emerging Markets covers that sector. For a racier option, look at Matthews Asia China Small Companies.

For a mainstream, high-risk global fund, Mr Yearsley suggests Scottish Mortgage Investment Trust or LF Blue Whale Growth.

‘Scottish Mortgage has a mix of listed and unlisted companies, with many tech companies and disrupters. It is run by one of the best investment fund managers, James Anderson.

‘Blue Whale is a focused global growth portfolio that is only 18 months old, but has had a tremendous start.’