This article is part of Morningstar's Guide to Financial Christmas Gifts. As you consider whether your friends and family have been naughty or nice we'll be revealing all you need to know about financial gifts for Christmas.
This Christmas, ignore the plastic tat and get the children in your family a gift that will really last a life time – an investment for their Junior ISA.
Unlike the adult Isa, JISA investments cannot be cashed in at any time, the child must reach 18 before they have access to their savings, so this is a great opportunity to take bets on riskier sectors such as emerging markets or smaller companies. If you choose a highly rated manager these types of funds may be volatile, but over the long term should outperform more staid investments such as gilts.
You must choose just one provider at a time to manage your investment JISA or cash JISA. You cannot for example save your 2014/15 allowance in a Santander cash JISA and then your 2015/16 allowance in a Nationwide cash JISA, unless you first transfer the balance.
Equally, any investments made in a JISA wrapper must be managed through the same fund supermarket each year. Most fund platforms, including TQ Invest, Fidelity Fundsnetwork, Hargreaves Lansdown, and BestInvest, offer JISA facilities.
Fearful you may be met with blank stares or even worse chocolate-fuelled tantrums if you turn up gift-less this yuletide? Pop down your local pound shop to quash the cries of consumerism and then make the savvy choice to bump up their Junior ISA with a top rated open or closed end fund. Are you saving comfortably? Then let me begin.
3 Highly Rated Funds for Your Junior ISA
Given the fund’s investible universe – Emerging Europe is dominated by only a handful of countries and sectors – it's not the first time the fund has experienced such big performance swings, and it’s likely such a pattern will continue, not least because of the possibility for strong political moves in that region. Each time the fund has subsequently bounced back, with the manager sticking to his process throughout, proving there’s merit in the firm’s approach.
Fund manager Sam Vecht is well suited to this mandate and he and his team have built up their expertise over a number of years and they take a keen political interest in their markets, too. While that in itself isn’t unusual, their political views play a key part in determining their macro stance and at times can make their funds look quite contrary to peers. Such a stance was seen in April 2014 when the fund was overweight Saudi Arabia by some 11 percentage points; conversely, it was underweight Kuwait by nearly 13 percentage points.
Invesco Perpetual Global Smaller Companies
This Bronze Rated fund is managed by Nick Mustoe, who boasts more than 25 years’ investment experience. The team uses a comprehensive and rigorous investment process that is designed to take into account the regional dynamics of small-cap investing. The equity analysis focuses on the earnings, valuation, and quality characteristics of potential companies. This philosophy has led to an unconstrained and highly diversified portfolio invested across regions and sectors.
These highly rated funds were identified for your consideration using the Investment Trust Screener and Fund Screener