ISA recommendations 2006

He explains: "This fund aims to produce a reasonable income with growth prospects by combining UK equities and corporate bonds. "The equity side is managed by the well-proven Jupiter Income manager, Tony Nutt, while John Hamilton, another experienced manager, looks after the bonds. This approach represents a sensible compromise over an income fund that invests wholly in equities or bonds".

Mark Dampier, Hargreaves Lansdown

For novice investors, Dampier makes a potentially controversial choice - the Hargreaves Lansdown Special Situations Fund.

He says: "Yes, I could be accused of being biased but this is a fund I buy myself. It is run by Lee Gardhouse and has a superb four-year track record. From a novice investor's point of view it gives exposure to some of the best fund managers in the industry, with some 25 holdings.

"This would also help the novice to more easily understand investment and the choices available. In other words I think it would be a great piece of education. The fund has approximately 50% in the UK with the rest overseas.

"The fund does not make big asset allocation decisions but rather concentrates on finding and holding the best fund managers.

"The fund tends to concentrate on more boutique fund managers who are heavily incentivised and are therefore less likely to leave. Indeed, the fund has only lost one fund manager in the four years it has been running."

Experienced investors would do well to choose Artemis Global Growth (minimum initial investment £1,000), suggests Dampier.

He explains his choice: "With more than 1,500 unit trusts to choose from, it is an almost impossible task to select one as experienced investors can go from very specific funds specialising in sectors to worldwide funds. I have therefore decided to cop out slightly and go for the Global Growth fund.

"This fund was taken over by Peter Saacke at the end of 2004 since when performance has dramatically improved. The fund uses their in-house quantitative stock selection tool called SmartGarp which helps sieve through the thousands of shares in their universe.

"The system seeks out the best opportunities on a worldwide basis and are presently heavily weighted to the overseas markets particularly Japan and emerging markets. I might add it is also a fund I hold myself."

Dampier recommends that investors looking for income consider UK equity income funds. He says: "I feel that bonds, often the traditional place for income, look fully priced at present. I therefore suggest that people should look more towards UK equity income funds and so recommend Invesco Perpetual Income (minimum initial investment £500), run by one of the very top fund managers in the UK, Neil Woodford.

"The fund has a relatively defensive leaning at the present time with large weightings in tobacco and utility stocks. Woodford sees these areas as being almost immune from economic troubles and believes they can markedly grow their dividend higher than inflation and give prospects for capital growth.

"Despite the fund having no weighting in oils and mining, two of the best sectors last year, the fund managed to achieve a total return of 26% in 2005 making it one of the very top funds in its sector.

"With a yield of approximately 3.5% and likely to grow, this is exactly the area that older investors can invest for income while younger investors can reinvest the dividends to make for bigger total returns."

Patrick Connolly, JS&P

For the novice investor, Patrick Connolly of JS&P recommends Rensburg UK Blue Chip (minimum initial investment £500). He says: "This fund is a core holding that will always be invested at least 90% in FTSE-100 stocks. Rensburg have a strong track record of running UK equities from their Leeds office and their large cap funds have been particularly consistent."

Baillie Gifford Japanese is a good choice for the experienced investor, says Connolly. "There are positive signs emanating from Japan," he explains.

"However, we do not know if this is another false dawn or if Japan has truly emerged from its slump. This fund is run on a team basis and predominantly invests in larger companies. It has an excellent long-term track record and typically holds stocks for around three years."

Investors looking for income should try L&G Fixed Interest, says Connolly. He says: "Fixed interest should be an important component of any investment portfolio.

"This type of fund, which invests in quality bonds, works particularly well when combined with equities within a portfolio. It boasts a strong investment team, and excellent track record and yields in the region of 5% per annum."

Anna Bowes, Chase de Vere Financial Solutions

Gartmore Cautious Managed fund - Run by the very experienced Chris Burvill, this fund invests into UK equities as well as fixed interest, which can keep the risk down. For a novice investor it is a gentle introduction to equities.

M&G South East Asia - This is a concentrated portfolio of 50 - 70 stocks from the ten major pacific basin stock markets. As such it is a higher risk fund more suitable for experienced investors who already have a diversified investment portfolio.

Aegon Extra Income - For an income seeker, the fixed interest ISA will provide a tax efficient fairly high level of income, plus the potential of limited capital growth. Aegon has a large global fixed interest resource and the fund is run very much on a team basis. It consists mainly of UK fixed interest bonds and preference shares with some exposure to a wide range of other fixed interest securities.

Unsung heroes and rising stars

With the Isa season underway, fund manager ratings systems for unit trust and OEIC managers are under increased scrutiny. But with few alternative ratings systems to go on, how do you discern who the unsung leading lights of the investment trust world are? And who are the ones to watch for the future?

Investment industry body The Association of Investment Trust Companies (AITC) has collated views from leading multi-managers actively investing in the investment trust sector through funds of investment trusts.

The AITC asked the opinions of Dan Kemp from Christows; James Carthew, managing director of Progressive European Markets Limited and Manager of Advance UK Investment Trust; Richard Scott, manager, iimia ACD Services Growth & Income Fund, (also Manager of New Zealand Investment Trust) and Julie Dent, manager, F&C Multi Manager Investment Trust Fund (also Manager of British Assets Investment Trust).

Unrecognised Star Fund Managers

Dan Kemp, Christows
"Many of the UK's outstanding fund managers are drawn to investment trusts, attracted by the consistent pool of capital and less pervasive marketing pressure. Investment trusts are therefore a structure that tends to attract purists.

"One of the most prodigious talents is Nick Train, manager of Finsbury Growth & Income and co-manager of Lindsell Train investment trust.

"Nick is probably the best exponent of value investing in the UK and a worthy successor in the apostolic line from Ben Graham via Warren Buffet. The clarity of his thought is matched by the consistency of its application. In a world increasingly dominated by short-term trading, Nick continues to focus on the production of good long-term returns."

Richard Scott, manager, iimia ACD Services Growth & Income Fund
"In March 2004, Invesco took the bold move of moving the management of their poorly performing Far East ex Japan investment trust, Invesco Asia, from their office in Hong Kong to be managed by Stuart Parks in their Henley office.

"The pressure involved in taking on this mandate must have been considerable, but Parks has more than risen to the challenge. Since March 2004, performance has steadily improved, and over the past six months (to Feb 9, 2006 net asset value) it is the top performing Far East ex Japan investment trust.

"Surprisingly, Parks has not received the recognition this transformation deserves, and Invesco Asia's shares still trade at a discount above the average for the peer group, a situation that is unlikely to last."

Scott also picks out Caroline Banszky and James Henderson for their stewardship of Law Debenture Corporation.

He explains: "Law Debenture is an unusual investment trust because in addition to its managed portfolio of global equities it runs a financial services trustee business.

"The fortunes of this business have been improved significantly over the past three years by a new managing director, Caroline Banszky, a figure still little-known in the investment trust world.

"Law Debenture's portfolio has been ably managed since 2003 by James Henderson, better known for the management of Lowland Investment Trust. "The turnaround in the fortunes of Law Debenture's trustee business under Caroline Banszky should steadily receive more attention, and this should lead to a re-rating of the trust's shares."

James Carthew, manager, Advance UK Investment Trust
"Russell Cleveland, manager of Renaissance US Growth and the US assets of BFS US Special Opportunities has delivered returns well in excess of his benchmark for many years.

"There are surprisingly few ways that investment trust investors can get access to the US market, but in my opinion this is far and away the best of them.

"US smaller companies are far more exciting than their larger brethren but you need a skilled stock picker. The Renaissance net asset value has more than doubled over the past five years while the Russell 2000 Index is up by just 19% and you can still buy it on a 10% discount."

Julie Dent, manager, F&C Multi-Manager Investment Trust Fund
"Among the established trust managers, quality continues to shine. Examples include Chris Turner at TR Property, Martin Hudson at JPMorgan Fleming Mercantile, John Pennink at British Empire and Mark Barnet at Perpetual Income and Growth and Keystone Investment Trust.

"New entrants to watch are Alan Burrows at Midas Income and Growth and Karen Robertson at Standard Life Equity Income, both of whom have run successful OEIC funds. It will also be interesting to see what changes are made at Monks Investment Trust when Gerald Smith takes over." Ones to Watch

James Carthew, Advance UK Investment Trust
"It is always difficult to predict who will perform, but we are watching Ciaran Mallon, the new manager of Invesco Income Growth.

"The team at Henley are given a lot of leeway in the way they manage their funds and Ciaran seems to be developing his own style. For instance, he is much more heavily exposed to banks than many of his colleagues and this will have served him well in recent months."

Richard Scott, manager, iimia ACD Services Growth & Income Fund
"One of the great attributes of the investment trust sector is the vast experience of many of its fund managers and the passion they have for investing.

One example is a relative newcomer to the sector, Dr Sandy Nairn, the ex-Chief Investment Officer of Scottish Widows. Nairn left Scottish Widows in 2003 to found his own firm Edinburgh Partners.

"Their flagship product Edinburgh Partners Global Opportunities Investment Trust, has done so well that when the directors of Anglo & Overseas Investment Trust sought to change their manager last year they appointed Nairn's team.

"This appointment is recognition of what is proving to be an up-and-coming success story in the investment trust sector." Dan Kemp, Christows
"Tim McCarron is one of the most obvious examples of the exciting new talent that continues to emerge in the investment trust sector.

"Tim has managed the Fidelity European Values trust since 2001. Over this period he has produced outstanding returns, continuing the trend established by his predecessor Anthony Bolton.

"While there is no doubting his talent as a stock picker, the real test will be how he copes in a less constructive market.

"John Pennink, manager of British Empire Securities, is another manager who has produced extraordinary returns over the recent past but may still have his best years ahead.

"Like Tim, John had the unenviable task of taking over from a legend with a long and distinguished track record.

"Like Nick Train, John is another exponent of value investing, seeking stocks that trade below their net asset value.

"A consistent application of this approach has enabled John to capture extraordinary gains as the investment trust sector has recovered over the last few years and should insulate the portfolio against overpaying for holdings at the top of the market."

"Having said that, it's no coincidence that a large number of investment trust fund managers have had spectacular and consistent returns year-in, year-out in the investment trust sector and it's a shame we can't mention them all.

But with few ratings systems in place for investment trust fund managers it's a good time to give at least some credit where it's due."