And a contrary, cautious view

THE rules of investing are changing. A 40-year downward trend in interest rates is ending and a not coincidental upward trend in major stock markets is under threat.

Massive overvaluations in the US stock market are a danger to investors. The pandemic has left us with inflation, supply chain and energy shocks. The war in Ukraine has inflamed these. Market vulnerability is now on steroids.

It is no longer adequate to take a Racing Post approach to your Isa investment choices. So what should you do?

Start by treading carefully. Then look for clues among investments which are working well right now.

The past ten years has been a graveyard for commodity funds. The worm is now turning.

JPM Natural Resources is the grandaddy in its sector and has exposure to oil, mining and metals.

After a turgid decade, it began to recover in 2019 and 2020 – and the upward trend is now accelerating. Over the past year, it has delivered a return of 34 per cent.

There is more to come. Buy. The fund’s total annual charges are 0.83 per cent.

Also, buy fund ASI Global Inflation-Linked Bond. We often think of inflation as being a British disease, but war in Ukraine has highlighted a global inflation problem – around energy, metals and food. So I choose protection at a global level.

As inflation goes up, so should the value of the bonds in this fund. It has generated a steady return of 7 per cent over the past year, 21 per cent over the past five. Total annual charges are 0.55 per cent.

Looking forward to my Isa contributions in the new tax year, I will buy into the cheapest major market in the world – the UK. My shopping list will include JOHCM UK Equity Income, Schroder Recovery, and Artemis UK Smaller Companies.

These three funds have respective five-year returns of 18, 19 and 31 per cent. Total annual charges are 0.83, 0.9 and 0.86 per cent respectively.

A final word. This is your money you are investing, so look after it. Don’t buy-and-forget.