It’s been an eventful start to the year.
We’ve had a new US president who’s stunned the world with his unusual government appointments and implemented tariffs on some of the US’s major trading partners.
There have been ongoing geopolitical tensions in both the Middle East and Russia / Ukraine.
We’ve had higher-than-expected inflation, lower-than-expected growth and central banks who seem increasingly reluctant to cut rates.
Against this backdrop, it’s perhaps not surprising that markets have had a bit of a wobble.
Technology stocks, which led on the way up, also led the way back down, with some dramatic falls in the first few months of the year.
The million-dollar question, of course, is will this continue going forward? Will the US recover in the next few months? Will tech stocks thrive under Trump? Will inflation fall and growth resume and the sun shine all summer?
Sadly, I can’t answer any of these questions with any degree of confidence. What I can tell you is that in the face of uncertainty, history has taught us that diversification is a good investment strategy.
Diversifying your portfolio into different types of investments, like shares and bonds, and geographies that could perform well in different economic and political scenarios should give you a more robust portfolio.
If you’re looking for ideas to diversify your Stocks & Shares ISA this tax year end, here are three funds you could consider.
This article isn’t personal advice. If you’re not sure if an investment’s right for you, ask for financial advice. Tax and ISA rules change, and any benefits will depend on individual circumstances.
You can invest without having to worry about UK income and capital gains tax with our most popular account, the HL Stocks and Shares ISA.
Open or top up an ISA from as little as £25 a month or a £100 lump sum.
Before you apply, make sure you’re happy with our terms and conditions (including Tariff of Charges) and key features. Then all you need is your debit card and National Insurance number to hand.
Plus, if you act before 5 April you could benefit from one of our special offers for new and existing HL clients. Terms apply.
3 fund ideas for a Stocks and Shares ISA
Investing in these funds isn’t right for everyone. Investors should only invest if the fund’s objectives are aligned with their own, and there’s a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a diversified portfolio.
For more details on each fund and its risks, use the links to their factsheets and key investor information.
Investments and any income from them can rise and fall in value, so you could get back less than you invest.
Legal & General Future World ESG Tilted and Optimised Developed Index
For a portfolio that’s mainly invested in one place (for example technology stocks), then a good first step could be to consider a global equity fund.
Investing in companies across the globe provides a good level of diversification in a single fund.
This fund offers broad exposure to a range of large and medium-sized companies in developed markets, like the US, Japan and Europe, while being mindful of environmental, social and governance (ESG) issues.
The fund aims to track the performance of the Solactive L&G ESG Developed Markets Index. It won’t invest in tobacco companies, pure coal producers, manufacturers of armaments or persistent violators of the UN Global Compact Principles.
An index tracker fund is one of the simplest ways to invest, and this one could be a good addition to a broader investment portfolio aiming to deliver long-term growth in a responsible way.
The fund has a small amount of exposure to smaller companies, which are higher-risk investments.
29/02/2020 To 28/02/2021 | 28/02/2021 To 28/02/2022 | 28/02/2022 To 28/02/2023 | 28/02/2023 To 29/02/2024 | 29/02/2024 To 28/02/2025 | |
|---|---|---|---|---|---|
L&G Fut Wld ESG Tilted and Opt Dvlp Idx Fd C Acc | N/A* | 13.26 | 2.10 | 21.46 | 14.36 |
FSSA Asia Focus
If a portfolio could do with some exposure to certain geographic areas that have different drivers of growth, consider an Asian equity fund.
Over the years, rapid industrialisation, growing populations, and a desire to succeed have helped transform countries in the Asia region.
Domestic consumption is set to be a key driver of growth over the coming years, helped by a young and growing population, and rising wealth.
Continued innovation from companies at the forefront of technology based there could also provide exciting growth opportunities for investors.
However, younger economies mean the risks are greater and more volatility should be expected.
While Asia is home to developed markets like Hong Kong and Singapore, others, including China and India, are still emerging and tend to be higher risk. So, a long investment horizon is essential to help ride out the ups and downs.
This fund is run by a manager and team with a great pedigree of investing in Asia. We like the culture and philosophy at FSSA – the managers view themselves as stewards of investors' capital, looking after it as though it's their own. Martin Lau has an impressive track record of picking some of the region's best-performing companies over the long run.
29/02/2020 To 28/02/2021 | 28/02/2021 To 28/02/2022 | 28/02/2022 To 28/02/2023 | 28/02/2023 To 29/02/2024 | 29/02/2024 To 28/02/2025 | |
|---|---|---|---|---|---|
FSSA Asia Focus B Acc GBP | 23.74 | -1.16 | 0.40 | -8.27 | 11.92 |
MSCI AC Asia Pacific ex Japan TR USD | 27.61 | -8.24 | -2.08 | 1.26 | 13.47 |
IA Asia Pacific Excluding Japan TR | 31.65 | -6.44 | -1.66 | -1.79 | 10.26 |
Troy Trojan
In times of uncertainty, one investment which tends to do well is gold.
This is because it often acts as a ‘safe haven’.
It had a fantastic run in 2024, rising 28.89%* in the 12 months to the end of December 2024, and a further 6.95%* in the first two months of 2025.
While we wouldn’t necessarily expect returns to continue at this pace, there are still some tailwinds at play. The uncertain outlook, combined with increased buying from central banks, particularly in emerging markets, could help support gold in 2025 – of course there are no guarantees and past performance isn’t a guide to the future.
For a portfolio that’s looking to get some exposure to gold, the Troy Trojan fund could be worth a look.
The fund’s managers, Sebastian Lyon and Charlotte Yonge, manage to take advantage of the attributes of gold without putting all their eggs in one basket. Rather than trying to shoot the lights out, the fund aims to grow investors' money steadily over the long run, while limiting losses when markets fall.
The fund is focused around four 'pillars'.
The first contains large, established companies Lyon and Yonge think can grow sustainably over the long run, and endure tough economic conditions.
The second pillar is made from bonds, including US index-linked bonds, which could shelter investors if inflation rises again. Some of the fund is also invested in traditional UK government bonds (gilts).
The third pillar consists of gold-related investments, including physical gold.
And the final pillar is ‘cash’. This provides important shelter when markets stumble, but also a chance to invest in other assets quickly when opportunities arise.
The managers have tended to focus on companies based in developed markets, like the US and UK. This includes some of the world's best-known companies with highly recognisable brands.
The manager has the flexibility to invest in smaller companies, which, if used, adds risk. The fund is also concentrated, which means each investment can contribute significantly to overall returns, but it can increase risk.
29/02/2020 To 28/02/2021 | 28/02/2021 To 28/02/2022 | 28/02/2022 To 28/02/2023 | 28/02/2023 To 29/02/2024 | 29/02/2024 To 28/02/2025 | |
|---|---|---|---|---|---|
Trojan X Accumulation | 5.37 | 12.80 | -2.37 | 3.25 | 9.26 |
FTSE All-Share TR | 3.50 | 16.03 | 7.30 | 0.57 | 18.37 |
UK Retail Price Index | 1.37 | 8.18 | 13.84 | 4.53 | 2.81 |
Bloomberg Gold TR | -2.06 | 13.77 | 6.44 | 6.52 | 38.01 |