The 25 best funds for your Isa – picked by our experts

Every spring Telegraph Money identifies its favourite investment funds – read on to see which ones have made the cut this year.

It’s tough for investors right now. Inflation, while falling, has hit households’ willingness to spend, war rages in Europe and the Middle East and businesses fear the next economic shock.

In a changing world, investors’ portfolios need constant attention. Telegraph 25, the list of our favourite investment funds, has always been designed to withstand change. It is a mixture of funds that we believe will grow your money in the long run, funds that provide income, strategies that will protect your savings when markets fall and funds we think offer an exciting opportunity.

And once you’ve picked the funds you want in your Isa, use our “heat map” to work out whether you could be saving money by switching Isa providers.

We aim to choose funds that can stand the test of time. Even with so much uncertainty right now, these should do what we need them to. 

As ever, investors must remember that this list is not an off-the-peg portfolio to pump your money into and forget about. DIY investing requires you to understand the risks you are taking and conduct your own research to ensure that an investment fits your needs and blends with others that you already hold. 

Neither do we recommend buying all the funds on the list at the same time. The funds, and their aims, must be considered and match the aims and objectives of the investor.

Some funds on the list have been chosen expressly because they can be relied on to do several jobs well without the need for close monitoring. Others, however, take more risk by design.

The Telegraph 25 is designed to highlight investments that are the best in the field they operate in and we believe will give the best returns for the risk being taken. Unless we make clear to the contrary, they are intended for long-term investors who want a home for their money for five, 10 or even 20 years.

We have divided the list into five sections: British funds, world funds, income funds, “get rich slow” funds and “wild cards”.

1. iShares UK Equity Index

“Passive” funds, which track the performance of a particular market rather than employ a fund manager to try to beat it, are a low-cost option. For access to Britain’s stock market, this fund is hard to match.

Charge: 0.05pc | Cheapest share class: D | Five-year return: 33.5pc

2. Jupiter UK Alpha

This fund’s name has changed repeatedly but the manager stayed the same until last summer when the veteran investor (and Telegraph Money columnist) Richard Buxton retired after a career spanning nearly four decades. The fund has been handed over to Ed Meier and Errol Francis. Their “value” investment style has recently come back into favour and the fund is among the top 25pc best performers of its peer group over one, three and five years, according to FE Fundinfo, a fund information service. 

Charge: 0.85pc | Cheapest share class: I | Five-year return: 29.9pc

3. Liontrust Special Situations

Managers Anthony Cross and Julian Fosh invest in British companies of all sizes and few have matched their record over the past decade. 

Charge: 0.81pc | Cheapest share class: I |  Five-year return: 29.9pc

4. Fidelity Special Values

Alex Wright, manager of this investment trust, has returned to form after years of struggle. Value stocks remain Wright’s bread and butter and his longer-term record is impressive. Underpriced small and medium-sized British firms feature, as do FTSE 100 blue chips.

Charge: 0.7pc | Ticker: FSV  | Five-year return: 31.9pc

5. Marlborough UK Micro Cap Growth

An option for those who want to benefit from the growth offered by Britain’s smallest companies. The veteran investor Giles Hargreaves has stepped down from the fund but his successors invest in the same way. However, performance has slipped over the past few years. That said, the very smallest companies have been particularly unloved recently. We’ll stick with it but, as before, monitor progress.

Charge: 0.8pc* | Cheapest share class: P |  Five-year return: 10.9pc

6. Legal & General International Index Trust

This passive fund invests in more than 2,000 companies that make up overseas stock markets. Held alongside the iShares UK Equity Index fund, it would give investors access to the world’s shares at a low cost.

Charge: 0.13pc* | Cheapest share class: C |  Five-year return: 75.2pc

7. Scottish Mortgage

This standout trust made its name backing fast-growing companies that revolutionised their industries. The portfolio has struggled since the end of the zero-interest-rate era but that should not deter investors: few funds have the same depth of experience in identifying the small group of truly world-changing companies, such as Tesla and Moderna. Long-standing manager James Anderson has moved on but his successors are steeped in the same investment strategy.

Low charges and access to unlisted companies make this a must-have in any growth portfolio.

Charge: 0.34pc | Ticker: SMT | Five-year return:64.5pc

8. Fundsmith Equity

Investment star Terry Smith’s mantra of “buy good companies, don’t overpay, do nothing” has delivered stellar long-term returns. As a “growth” fund it has suffered recently but less so than many rivals. It remains worthy of its relatively high charge.

Charge: 0.94pc | Cheapest share class: I | Five-year return: 68.2pc

9. JP Morgan Emerging Markets

Veteran manager Austin Forey, an investor in emerging markets since 1994, runs this £1.4bn investment trust. An outperformer during the pandemic, its returns have fallen over the past couple of years, so while it remains on our list for now it’s another one to monitor.

Charge: 0.87pc | Ticker: JMG | Five-year return: 25.5pc

10. The Global Smaller Companies Trust

Its heritage stretches back 133 years (it formerly bore the F&C and BMO names and is now run by Columbia Threadneedle) and this investment trust offers access to smaller stocks traded on markets around the world. If you invest for long periods, smaller companies have historically tended to produce better returns than larger ones. Manager Peter Ewins invests in funds run by specialists, including those not available to DIY investors. Mr Ewins is to retire from the trust in May 2024 after 26 years and will hand over to Nish Patel. We’ll monitor progress.

Charge: 0.94pc | Ticker: GSCT | Five-year return: 21.2pc

11. iShares Core S&P 500 Ucits ETF

The US market is hard to beat, as managers and their investors have found out. This passive exchange-traded fund tracks the S&P 500 index of the largest stocks in the world’s biggest economy at a very low cost.

Charge: 0.07pc | Ticker: CSP1 | Five-year return: 98.1pc

12. Baillie Gifford Positive Change

This relatively young fund delivered high returns from fast-growing companies during the pandemic but is another to have fallen hard since. It deserves consideration, even if the social impact of investments is not a primary ­concern.

Charge: 0.53pc | Cheapest share class: B | Three-year return: 102.5pc

13. Premier Miton European Opportunities

Yet another fund to have had a strong pandemic, only to slip back since. The fund, which focuses on quality companies the managers hold for a long time, remains one to monitor.

Charge: 0.82pc | Cheapest share class: B | Five-year return: 72.4pc

14. TR Property

TR Property is an unusual trust in that the bulk of its portfolio is made up of shares in European property companies, although it also owns some buildings in the UK. Managed by the veteran investor Marcus Phayre-Mudge, it yields 4.8pc at the time of writing and crucially maintained its dividend during the pandemic and recent market falls, making use of its reserves. Like all property funds, it has suffered some severe falls since inflation and interest rates started to rise but for those who want exposure to the sector it remains a firm choice. 

Charge: 0.84pc | Ticker: TRY | Five-year return: 4.7pc

15. BioPharma Credit 

This unusual listed fund lends money to young drug companies, often before they have had a commercial success. While this may sound risky, the fund has suffered only one partial default. Yet it can charge high rates on its loans, hence its own generous yield of 7.5pc. 

Charge: 1.16pc | Ticker: BPCR | Five-year return: 33.5pc

16. Artemis Income

Offering a yield of 4pc, this £4.1bn fund has consistently beaten the average returns of rivals and the stock market. Managers Adrian Frost and Andy Marsh invest predominantly in FTSE 100 stocks and have decades of experience between them.

Charge: 0.8pc* | Cheapest share class: I | Five-year return: 40pc

17. Man GLG Income

Henry Dixon, manager of this £1.4bn fund, does not confine his search for income to blue chips: British “mid-cap” and smaller stocks make up almost 40pc of his portfolio. Between his experience, a yield of 5.3pc and the fund holding up in tough markets, it remains an evergreen and reliable option.

Charge: 0.9pc | Cheapest share class: D | Five-year return: 36.7pc

18. Invesco Monthly Income Plus

A mix of bonds with a small portion of shares (less than 20pc) produces this fund’s 5.7pc yield, paid monthly. The portfolio produces income from a range of sources, offering something different from rivals.

Charge: 0.67pc* | Cheapest share class: Y | Five-year return: 26.7pc

19. City of London 

No investment trust boasts a better dividend record than City of London. It has raised its payout in each of the past 56 years and offers a high yield of 5pc. 

It invests mainly in British stocks that belong to the FTSE 100. The trust is a solid income pick and remains a firm favourite.

Charge: 0.74pc | Ticker: CTY | Five-year return: 33.3pc

20. Personal Assets 

“Our policy is to protect and increase (in that order) the value of shareholders’ funds over the long term.” So runs this investment trust’s mission statement and, while no investment can offer a completely smooth ride, it has delivered on it admirably over the long term. 

Charge: 0.67pc | Ticker: PNL | Five-year return: 27.5pc

21. Vanguard LifeStrategy

Few options are cheaper and simpler than Vanguard’s LifeStrategy range for passive investors. Each of the five portfolios invests a different portion in shares, from 20pc to 100pc, with the remainder held in bonds. Both portions of each fund are invested in Vanguard tracker funds. About the simplest and cheapest “multi-asset” fund you can find.

Charge: 0.22pc | Cheapest share class: A | Five-year return: 29.5pc (60pc shares)

22. Ruffer Investment Company

This proved its mettle in 2008, rising when markets tumbled, and has done so again amid more recent turmoil. Falling stock markets are the managers’ bread and butter. A great defensive option.

Charge: 1.07pc | Ticker: RICA | Five-year return: 32.5pc 

23. HarbourVest Global Private Equity

Private companies are usually out of reach for DIY investors, but can be accessed through trusts such as this. It buys other funds, offering a slice of thousands of unlisted firms, so it is effectively a tracker fund for private businesses, which over the long term have tended to produce higher returns than their quoted counterparts. Investors should be prepared for volatility, however.

Charge: 1.18pc | Ticker: HVPE | Five-year return: 73pc

24. Biotech Growth

Biotechnology stocks have offered great returns and diversification in the past decade. Few funds picked as many winners as this one. The specialist portfolio is strictly for the adventurous, however, with holdings in small and unknown stocks that may shine in future.

Charge: 1.3pc | Ticker: BIOG | Five-year return: 27.8pc

25. Fidelity China Special Situations

Dale Nicholls, the manager, has a strong record in China, one of the world’s fastest growing economies. The trust has absorbed rival Abrdn’s China Investment Company, creating a £1.2bn portfolio that will continue to be managed by Mr Nicholls and Fidelity. 

Charge: 1.18pc | Ticker: FCSS | Five-year return: 11pc

*Fund is available at a lower cost on Hargreaves Lansdown

What do you think of our selection? Have we missed out any of your favourite funds, or been too kind to some managers? Let us know in the comments section below.