The ISA deadline for stocks and stocks is fast approaching. With that in mind, here are three funds to buy for tax-efficient packaging right now. I would buy all of these funds for my own ISA.
Funds to buy
One of the best growth funds currently on the market is the Growth of the blue whale fund, in my opinion. I would buy this fund for my stocks and ISA stocks today to gain exposure to some of the fastest growing companies in the world.
At the time of writing, 8% of the fund is invested in Microsoft, 8% are invested in a software group Adobe and 6% in payment processing Visa. About 70% is invested in the United States, the rest in the world.
The only big risk of investing in growth stocks is volatility. Growth stocks can be extremely volatile, so this fund may not be suitable for all investors. In recent weeks, rising interest rates have pushed growth stocks down. This trend could continue. The fund also only returns 0.08%. This could make it unattractive to income investors.
Still, I think it’s one of the best funds to buy right now, given its exposure to international growth investments.
ISA stocks and shares
The tax advantages of an ISA Stocks and Shares make it the perfect package for holding income investments.
I think the TB Evenlode Income funds are one of the best funds to buy for income. The fund currently has a 3% dividend yield. He owns some of the best income stocks in the market, such as Relx, sage and GlaxoSmithKline.
Around 84% of Evenlode’s assets are invested in UK equities. The rest is invested in the United States and Europe. I think this provides a good level of diversification for income investors.
The most significant risk facing this fund is the possibility of reducing dividends. Over the past year, many income stocks cut their distributions to investors to preserve liquidity during the pandemic. As a result, income funds had to cut their dividends to investors. It’s a threat that will always dominate Evenlode. This is the big challenge that all income investors face.
Despite these challenges, I would buy the fund for my stocks and ISA stocks today.
The two funds above are heavily exposed abroad. For exposure to UK equities, I would buy a simple FTSE 250 follow-up funds.
These passive funds are only designed to track the performance of the underlying index. As a result, there is no chance that they will upgrade. This is the biggest risk of this investment. If the index is struggling, the fund will also struggle. The manager is also unable to avoid certain investments. This means that the fund may hold investments that do not meet certain standards, such as arms and oil and gas.
As a straightforward way to invest in UK, I think this is a great stock and equity ISA choice without paying over the odds of an expensive manager. Most active fund managers underperform the index anyway over the long term, so I’m not afraid of missing out on profits.
Rupert Hargreaves has no actions mentioned. Teresa Kersten, an employee of LinkedIn, a subsidiary of Microsoft, is a member of the board of directors of The Motley Fool. The Motley Fool UK owns shares and has recommended Microsoft and Visa. The Motley Fool UK recommended GlaxoSmithKline, RELX and Sage Group. The opinions expressed on the companies mentioned in this article are those of the author and therefore may differ from the official recommendations that we make in our subscription services such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that considering a diverse range of ideas makes us better investors.