What is a ready made investment portfolio ISA?
A ready made investment portfolio is simply a collection of investments and a fund portfolio ISA offers a convenient way to utilise your annual investment ISA allowance across a wide range of assets.
The portfolio will typically be put together by investment experts and different portfolios will usually have different risk profiles e.g. cautious, balanced, adventurous.
Some providers may create portfolios using a number scale; 1 for low risk up to 7 for high risk. This is particularly useful for new investors who can decide what trade off they want between investment risk and potential investment returns.
This can allow you to diversify your potential means of earning a return on your saving and help you to spread your risk.
A ready made portfolio may include various types of assets such as equity, cash and bonds.
Different fund portfolio ISAs may focus on a specific geographical area or specialise in a particular market.
The exact proportion you invest in each area will depend on your approach to risk as well as your investment objectives.
Most investment experts would agree that a balanced portfolio is vital when it comes to maximising your chances of getting a good return on your investments.
With a ready made portfolio the manager will typically rebalance the portfolio at least annually to ensure the risk profile is maintained.
What types of ready made investment portfolios are there for my ISA?
There are various ready made investment portfolios to suit different types of investors with different financial goals and attitudes to risk.
Examples offered by many leading providers include:
Growth portfolios – Funds are chosen with the aim of achieving long term growth. Investors will likely not see an immediate return, but could achieve a significant return over a longer time frame.
Income portfolio – Funds are selected with the aim of delivering a consistent level of income. This type of ISA is likely to pay out on a regular basis, which may be monthly, quarterly, semi-annually or yearly. As your money is in an ISA wrapper income will be paid to you tax free.
Ethical portfolio – Funds are chosen with the aim of achieving a balanced risk approach, while fulfilling certain ethical criteria e.g. sustainable investing, investing in companies that deliver products or services that have a positive impact on people and the environment.
This type of portfolio may result in slightly lower returns that some alternatives, but is popular with conscientious investors. Interactive Investor for example offer a ethical growth ready made portfolio managed by their investment experts which can be held in an ISA.
UK portfolio – Funds are selected with the aim of delivering income or growth, or a combination of the two, through investment in UK companies. This type of fund is popular with investors who wish to use their savings to help stimulate the UK economy.
Global portfolio – Funds are chosen from a variety of non-UK companies with the aim of achieving income, growth, or both. Spreading your investments around the world can help to mitigate the risk of volatility in a single country’s market.