Important information - the value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

On Wednesday, Chancellor Jeremy Hunt confirmed the UK ISA in his Spring Budget, which sets out a new £5,000 allowance, in addition to the existing £20,000 ISA. But it comes with a restriction - the new allowance is exclusively for UK-listed companies.

According to the UK Treasury, the main objective of this increase is to, “support a culture of investment in the UK” and “give people the opportunity to invest and benefit from the UK’s vibrant capital markets and high-growth companies.”

How the government will define UK companies is yet to be confirmed. Until then, the Treasury is opening a consultation that is set to close on 6 June 2024.

My colleague, Ed Monk explored 7 things you need to know about the ‘UK ISA’.

If you’re curious about what UK funds you can consider in your ISA, our Select 50 - a list of expert selected funds, offers a variety of actively and passively managed options, that provide you exposure to UK large-cap and mid-sized companies. 

Region Fund
UK Fidelity Special Situations Fund
UK FTF Martin Currie UK Equity Income Fund
UK iShares Core FTSE 100 ETF
UK Liontrust UK Growth Fund
UK Vanguard FTSE 250 ETF

 

Here’s a closer look at the five UK funds from our Select 50:

1. Fidelity Special Situations Fund

This actively managed fund was first launched in 1979 and aims to invest at least 70% in UK companies. There’s a focus on companies that the manager believes are undervalued.

Our experts like this fund because the manager is a “seasoned UK investor.” There’s also a willingness to invest in smaller companies, an area in which Fidelity brings expertise.

The fund’s top holdings include DCC, a sales company that operates across energy, healthcare, and technology, consumer staple Imperial Brands, insurance firm Aviva, facility management firm MITIE Group and pharmaceutical company GSK.

This fund may be suitable if you’re looking for a sensibly managed UK equity fund.

The fund’s ongoing charge is 0.91%.

2. FTF Martin Currie UK Equity Income Fund

This actively managed fund aims to generate an income that’s higher than the FTSE All-Share Index.

Its top holdings include oil giants, Shell and BP, consumer goods company Unilever, pharma companies, AstraZeneca and GSK, miner Rio Tinto, British American Tobacco, and utilities firm National Grid.

Our experts like this fund as it invests primarily in companies listed in the UK, although the investment manager has the freedom to invest up to 10% outside the FTSE All-Share Index.

The manager is also committed to UK equity investing, which can be a rarity, as most investment firms tend to focus on global investing.

This fund may be suitable if you’re looking for dividend income from companies primarily listed in the UK.

The fund’s ongoing charge is 0.51%.

3. iShares Core FTSE 100 ETF

This passively managed fund tracks the FTSE 100 Index - which includes the 100 largest companies listed in the UK.

Its top holdings include some familiar names, including Shell, AstraZeneca, HSBC, Unilever, BP, and GSK.

Our experts like this fund as it is views BlackRock as a seasoned investor in passive funds, and the fund’s costs are low.

This fund may be suitable if you’re looking for exposure to large UK equities, have a long-term horizon and you’re cost-conscious.

The fund’s ongoing charge is 0.09%

4. Liontrust UK Growth Fund

This actively managed fund invests at least 90% in companies that are incorporated, domiciled, or conduct significant business in the UK.

Shell, AstraZeneca, BP, Unilever, GSK, beverage company Diageo, analytics firm RELX and foodservice company Compass Group make up some of the fund’s top holdings.

Our experts like this fund as the managers seek to identify companies that possess intangible assets or other durable competitive advantages.

It’s worth noting that this fund’s approach has a ‘quality’ bias, meaning it will buy companies that tend to be more expensive than others. Due to this, the manager takes a very long-term view when investing.

This fund may be a suitable addition to your portfolio if you’re looking to invest for ten years or more.

The fund’s ongoing charge is 0.82%.

5. Vanguard FTSE 250 ETF

This passively managed fund tracks the performance of the FTSE 250 Index and invests in medium-sized UK companies.

Its top 10 holdings include budget airline easyJet, property developer British Land, renewable infrastructure company Greencoat UK Wind, property developer Bellway and financial services firm Alliance Trust.

This may be a suitable addition to your portfolio if you want to seek exposure to medium-sized UK companies, have a long-term horizon and are cost-conscious.

Given that the fund invests in medium-sized companies, there may be more volatility and risk arising compared to larger sized companies. If you’re concerned about risk, the iShares Core FTSE 100 ETF may be more suitable.

The fund’s ongoing charge is 0.11%.

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Please be aware that past performance is not a reliable guide indicator of future returns. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. There is no guarantee that the investment objective of any Index Tracking Sub-Fund will be achieved. The performance of the iShares Core FTSE 100 ETF and Vanguard FTSE 250 ETF may not match the performancr of the indices they track due to factors including, but not limited to, the investment strategy used, fees and expenses and taxes. Select 50 is not a personal recommendation to buy funds. Equally, if a fund you own is not on the Select 50, we're not recommending you sell it. You must ensure that any fund you choose to invest in is suitable for your own personal circumstances. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.

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