JISAs: Your clients' investment options

Peter Walls, manager of the Unicorn Mastertrust fund, offers his advice on which asset classes are best suited for newly-launched Junior ISAs.

Launched at the beginning of November, the Junior ISA (JISA) has got off to a pretty quiet start. This may of course be due to the prevailing turmoil in markets but it is more likely to be the case that JISAs will follow the pattern of the adult version, with the majority of purchases taking place in the final months of the tax year – cue forthcoming advertising campaigns featuring building blocks, mortarboards etc.

Whether investing a lump sum into an ISA or JISA during the often buoyant markets of the New Year, rather than when markets are depressed, as they are today, is a moot point best saved for another day.

Providing advice on asset allocation within a JISA is not going to be easy as each case will obviously be different.

This probably explains why we have seen such a variety of recommendations from commentators, ranging from cash JISAs and cautious managed funds to equity income funds (somewhat oddly as income cannot be taken from a JISA) and emerging markets funds.

Much obviously depends on the age of the child and the objectives of the investment.

Is the aim to pay for tertiary education, to climb the first rung of the property ladder or to provide a kick start to life-time savings? Will it be a one off investment or will it be an annual event? And what level of risk is the person that is putting the money into the JISA willing to take on behalf of their little angels?

Grandparents are likely to be more risk averse and many will simply view JISAs as a convenient way of passing on their wealth via an investment that cannot be frittered away, at least not until the child reaches the age of 18.