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Morfitt & Turnbull

Issue 46   

ISAs 2019/20 – TIME TO INVEST?

The annual adult ISA allowances have been kept at £20,000 per individual for another year.

So with this in mind we have chosen some funds as the main topic of this mailshot, as we did 2 years ago when the ISA allowance increased, that may appeal to you in the following categories as follows.
For risk grade 3 - Cautious Investors
Prufund Cautious
Prufund Cautious
One of our favourites a dependable “plodder”. “Plodder” is not a derogatory term more a friendly reliable investment. This has an expected growth rate (EGR) of 5.5% p.a. and has only fallen in value twice in over 9 years.
For risk grade 4 - Low to Medium Risk Investors
a. Evenlode Income
Evenlode Income
The fund aims to achieve attractive long-term total returns, with an emphasis on income. The fund has five stars with Morningstar, a very low number of holdings and virtually no portfolio turnover. The fund is 80% invested in the UK and about 14% in America which makes it a diversification for many. The yield of 3.5% means it would also be appropriate for people looking for dividend income.
b. First State Global Listed Infrastructure
First State Global Listed Infrastructure
This is a friend that we have been championing for some time, with all of the potential infrastructure spend in America by “the Donald” it is logical that companies that build roads, schools, hospitals etc. will get a boost. It also invests in railways, airports, ports, as well as oil & gas services and utilities. This pays a dividend of 3% and suits income seekers.
For risk grade 5 - Balanced Investors
a. Baillie Gifford Managed
Baillie Gifford Managed
The objective is to produce attractive returns over the long term by investing worldwide. The fund will be diversified by exposure to different asset classes internationally and by exposure to companies operating in a wide range of industries. The portfolio will generally also have exposure to some medium and smaller sized companies as well as the largest ‘blue chips’. The fund receives five stars with Morningstar.
b. Evenlode
Global Income
Evenlode Global Income
This fund aims to achieve long term total returns with an emphasis on income. This fund is managed by Ben Peters, who is co-founder of the company and also deputy manager of the Evenlode Income fund. This fund is relatively new, has a low number of holdings and a moderate yield. It is ideal for clients looking for international exposure with income.
For risk grade 6 – Balanced Investors
a. Lindsell Train UK Equity
Lindsell Train UK Equity
The aim is to invest in the securities of companies which are primarily listed, quoted or dealt on any of the markets of the London Stock Exchange, including the Alternative Investment Market (AIM), with the objective of achieving capital and income growth and providing a total return in excess of that of the FTSE All Share Index. The fund receives five stars with Morningstar and is ideal for people looking for a long term investment in UK equities.
b. Fundsmith Equity
Fundsmith Equity
The fund’s objective is long term growth in value. It has a small number of holdings and has got a very consistent track record and the fund has five stars with Morningstar and over £3bn in funds. It has a very low volatility rating for its sector and invests only in US, UK and Europe and is a fund for clients looking for international exposure who are happy to stay away from some of the more volatile sectors of the Far East.
For risk grade 7 - Adventurous Investors
a. AXA Framlington Global Technology
AXA Framlington Global Technology
The fund’s investment approach is to achieve long term growth, principally through investments in companies engaged in the research, design and development of technologies in all sectors including information technology and the internet and in companies manufacturing and distributing products and/or providing services resulting from such research, design and development. It has five stars with Morningstar and would be ideally suitable for someone who requires exposure to the technology sector. It is mainly a US fund and therefore performance is mainly taken from NASDAQ shares.
b. Sarasin
Food & Agriculture Opportunities
Sarasin Food & Agriculture Opportunities
The objective of this fund is to achieve long term capital growth through investment in food and agriculture companies from across the world. The fund receives five stars with Morningstar. Geographically the fund is diverse. This fund should only be used for clients with large portfolios who want diversification.
c. Smith & Williamson Artificial Intelligence
Smith & Williamson Artificial Intelligence
The objective of the fund is to achieve capital appreciation. A new fund that has great potential as AI is used in more industry sectors. It is relatively high risk and should be used for clients who can take the ‘bumps’ that often come with a new sector.
If you are interested in any of these featured funds, or any other funds then let us know and we’ll write a bespoke report for you. Please call your adviser on 01565 624370 to discuss.



Adam's Technical...  Investment Income
The way tax is calculated on dividend income received from shares and unit trust/investment trust portfolios changed in April 2016.

Under the old rules a basic rate taxpayer met the liability because tax was deducted before the dividend was paid. There was a gross dividend and a net dividend. The net dividend was paid after 10% corporation tax had been deducted and a basic rate taxpayer had no more tax to pay. Higher rate taxpayers had to pay an additional 22.5% tax upon the gross dividend figure.
When the new rules were introduced on the 6 April 2016 the net dividend effectively became the new gross dividend. No tax was payable on the first £5,000 of dividend income received in the tax year. Any amount over this within the basic rate band is taxed at 7.5%, at the higher rate 32.5% and the additional rate at 38.1%. From the 6 April 2018 the percentage tax rates remained the same but the allowance was reduced from £5,000 to £2,000. The allowance and tax rates are the same for the 2019/20 tax year.

This rule change means that basic rate taxpayers who previously met the liability at source will now have to pay tax if their dividend income is over the £2,000 allowance. If not already, this income will need to be disclosed to HMRC.
You should note that the dividend income is taxable whether it is paid out, used to purchase more shares/units or rolled up and reflected in the performance of the investment fund.

Please also note that this rule change does not affect ISAs, pensions or investment bonds. If you believe you might be impacted, please contact your M&T adviser.

Gareth Says... 

What's happening in the markets? 
The BREXIT deadline has been and gone, the markets ignored it – why?

I sit in the camp that the market knows what’s coming towards it and has not been worried by BREXIT. The falls in the last quarter of last year were not BREXIT, in my opinion, but worldwide worries of a trade spat between the USA and China – if it were BREXIT why would Australia, Japan, Canada etc etc. fall?
  Brexit chaos?
The market is still bullish and, whilst it is, I believe that we are better taking advantage of it – have a look at some of the fund selections earlier in Craig’s piece, if you are interested in investing.

Staff Matters
In our last news letter we did an office survey to discover everyone’s UK holiday destination in light of us leaving the EU, but as you will all know this has now been delayed till who knows when, so for this mailshot we’d thought that we’d turn this on its head and find out the place that we’d most like to visit within the EU that we haven’t already been to!
Gareth –   Finland
Pauline –   Sweden
Craig –   Croatia
Adam –   Ponta Delgada, Portugal
Stuart –   Italy
Lisa –   Italy – cooking & wine tasting in Tuscany
Annie –   Italy
Zara –   Poland
Martin –   Finland


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