Fabulous funds for your Isa

Growth

Jason Hollands, managing director, Bestinvest

AXA Framlington UK Mid Cap (GB00B5032Q31)

AXA may be a giant group, but this fund is a minnow at around £70m. Nevertheless, we see the fund's size as a definite advantage as it can trade more easily. Medium sized UK companies have been the stand-out performers on the UK market over the last 10 years, but of particular relevance is the fact their earnings are much more domestically biased compared to the larger companies in the FTSE 100 which are more multinational in nature. As such, we feel this fund is better positioned to benefit from the UK domestic recovery than most. Top holdings include property website Rightmove (RMV), builders merchants Travis Perkins (TPK) and discount sports goods firm Sports Direct (SPD)."

Darius McDermott, managing director, Chelsea Financial Services

JOHCM Japan Fund (IE0034388797)

"My preferred asset class this year is developed market equities and within that, Japan is my favourite. The market has had a good run but I think there is more to come as Prime Minister Abe's arrows start to take effect. As the domestic economy starts to improve, small and mid caps should do well and JOHCM Japan Fund is ideally positioned to make the most of this scenario. The JOHCM fund is a multi-cap fund with a mid-cap bias, and is built for recovery more than defence. It has an experienced team we rate very highly."

Income

Jason Hollands, managing director, Bestinvest

Cazenove UK Equity Income (GB00B073JG03)

"Equity income funds have long been a popular with private investors, and rightly so. Whether you draw the dividends or reinvest them, over the long run dividends have accounted for much of the total return on UK equities. The Investment Management Association (IMA) UK Equity Income fund sector is something of a Champions League for fund managers and has long been dominated by some big beasts. However, with the news last year that the UK's most widely held income manager, Neil Woodford, is set to leave Invesco Perpetual, the tectonic plates are starting to shift.

Read more on this

"We're always on the look-out for the next generation of star managers and one we rate highly is Matt Hudson, manager of the Cazenove UK Equity Income fund, which is now part of the Schroders stable. Mr Hudson pursues a non-dogmatic approach, adapting the portfolio to suit each stage of the business cycle, so currently the fund is positioned towards recovery plays."

Adrian Lowcock, senior investment manager, Hargreaves Lansdown

Marlborough Multi Cap Income Fund (GB00B42TBF45)

"We like Giles Hargreave and the team at Marlborough because of their exceptional stock picking abilities. They are able to add value in the mid and smaller companies markets.

"Investors in this fund benefit from diversification away from core UK holdings, as well as accessing the rapid growth of equity income in the UK market. The fund currently yields 4.12 per cent.

"A £10,000 investment in the fund in January 2012, the first full calendar year since the fund's launch in July 2011, would have returned £1,110 in dividends. This investment would have also grown from £10,000 to £16,115 over the two years to 31 December 2013."

Wealth preservation

Jason Hollands, managing director, Bestinvest

Jupiter Absolute Return (GB00B5129B32)

"After stellar returns on developed equity markets during 2013, investors might want to tread more cautiously this year. Stock valuations are well out of the bargain basement and as the US progressively exits its massive Quantitative Easing programme, the road ahead could be bumpy.

"This environment could be more conducive to absolute return funds that have been largely ignored in recent years. The fund we highlight is Jupiter Absolute Return which has recently come under new management, following the hire of James Clunie from Scottish Widows Investment Partnership.

Read our report on this

"At SWIP he successfully managed the company's UK Flexible Strategy Fund (GB00B1265J60), and has also been a senior lecturer in finance at the University of Edinburgh. He is a notable authority on absolute return investing.

See our tip on SWIP UK Flexible Strategy

"The Jupiter Absolute Return Fund, which previously disappointed on expectations, now fully reflects James Clunie's approach targeting a 6 per cent a year return after fees across the market cycle. He does this through both long positions in stocks he likes and taking bets on stocks he thinks will fall."

See our interview with Mr Clunie on px

Robert Pemberton, investment director, HFM Columbus Asset Management

Newton Real Return (GB0001642635)

"This fund is included in the IMA Targeted Absolute Return sector but is essentially a conservatively managed multi-asset fund which we have been recommending to clients for many years. On occasion it can have significant equity exposure (currently this is around 53 per cent) to capture upside, and as such, there is potential for considerable loss of capital.

"However, so far this has been avoided by a high level of managerial skill and the fund even produced a positive return of 4 per cent in the calamitous year of 2008 with timely use of index futures to preserve capital. The fund is managed by industry veteran Iain Stewart and has an excellent performance record of both preserving and growing capital."

Newton Real Return is an IC Top 100 Fund.

Diversification

Robert Pemberton, investment director, HFM Columbus Asset Management

Cazenove European Income (GB00B7CM2R31)

"This fund is a wolf in sheep's clothing. Instead of the steady large cap companies, with stable revenues and strong balance sheets, typically found in income portfolios this fund uses a business cycle approach which currently leads it to having significant exposure to mid-cap cyclical companies. These are in sectors such as engineering and autos where the recovery in earnings is potentially greatest.

"We have been recommending the fund to clients since the beginning of 2013, and over this period it has rewarded investors with a return of around 50 per cent. This is potentially a volatile fund so not for the faint hearted, but its relatively small size (£241m) gives it plenty of flexibly.

"It has a talented and driven manager in James Sym."

Ben Gutteridge, head of fund management, Brewin Dolphin

River & Mercantile World Recovery (GB00B9428D30)

"This fund is as pure a play on global recovery as one is likely to find, with Europe and Japan dominating the exposure. More broadly this strategy invests in out of favour areas within the market, and that stand to benefit the most from an improved global trading environment.

"Companies are not selected on valuation grounds alone, however. A catalyst for a rerating must also exist, such as management change or industry consolidation."

Private investors can buy the fund on platforms such as Charles Stanley Direct and Fidelity FundsNetwork.

Read our tip on River & Mercantile World Recovery

Contrarian bet

Adrian Lowcock, senior investment manager, Hargreaves Lansdown

JPM Natural Resources Fund (GB0031835118)

"I think the best contrarian bet at the moment is mining stocks. There are a few managers picking shares in individual mining companies already, such as Old Mutual's Richard Buxton. Sentiment is still negative, but they are cheap and the results for mining companies this year were pretty positive - better than expected and the sector has started to perform.

"It is always risky trying to be contrarian and usually investors get in too early or too late. If you are too early then it requires a lot of patience to wait for the market to turn back in your favour.

"But a fund to consider is JPM Natural Resources. This is a core commodities fund and offers exposure to base metals, gold and precious metals, and energy. It invests in both small and large caps."

Darius McDermott, managing director, Chelsea Financial Services

M&G Global Emerging Markets (GB00B3FFXV23)

"Emerging markets are looking very attractive on valuations but lacking a short-term catalyst in my view. That said, if I've learned anything, it is that if you buy something when it is cheap you have a better chance of making money in the long-term.

"My preferred fund is M&G Global Emerging Markets. The manager, Matthew Vaight, invests in any emerging market region and avoids stocks affected by political risk. He's a value investor and contrary to what people think, value styles rather than growth tend to outperform in emerging markets. He has a consistent track record and does well in both rising and falling markets. This may well be one for the new tax year though - as a regular monthly investment rather than a lump sum."

Funds for your Isa

Source: Morningstar

Performance data as at 25 February 2014