Skating on thin Isas

The deadline for opening a tax efficient Individual Savings Account (Isa) for this tax year is six weeks away, but investors are hardly beating a path to the fund managers' doors to spend their £7,000 annual allowance.

If investors are reluctant to part with new money this Isa season, they should at least take a duster to their existing portfolios, advisers say.

Selling funds that have lost money effectively crystallises losses, a move that might deter many Isa investors. One disadvantage of holding funds inside rather than outside an Isa is that losses on a sale cannot be offset against gains elsewhere. such as from the sale of a buy-to-let property.

However, Bestinvest's Modray says it may be more profitable to get out of dog funds sooner rather than later. He says: "By shifting what's left to a better fund there is at least a chance of recouping the losses, a chance you're unlikely to have by staying in the worst funds."

For a copy of Bestinvest's Spot the Dog report, call 0800 093 0700.

Tips from the top

No single fund can answer an investor's needs, as everyone has different financial goals and attitudes to investment risk. Nevertheless, Homes & Property asked three leading independent financial advisers to recommend one high-, mediumand low-risk fund they like this Isa season.

Philippa Gee of Wolverhampton-based Torquil Clark

Low risk: Gartmore Cautious Managed. Run by Chris Burville, it has holdings in both equity and bond sectors.

Medium risk: BWD UK Blue Chip Growth. Run by Colin Morton, this is a core holding for those wanting FTSE 100 exposure.

High risk: Artemis UK Special Situations. Run by Derek Stuart, this is a broadly based actively managed aggressive fund in the UK.

James Dalby of Bates Investment Services

Low risk: Skandia Cautious Fund, at present invested 55 per cent shares, 45 per cent cash and bonds across a range of funds.

Medium risk: Fidelity Weathbuilder, overseen by manager Richard Skelt, invests globally in a range of Fidelity funds.

High risk: Gartmore Global Focus. Managed by Neil Rogan, it has a concentrated portfolio of international shares.

Justin Modray of Bestinvest

Low risk: Keydata UK Protected Growth Plan. Offers FTSE 100 exposure with protection against big losses.

Medium risk: Framlington UK Select Opportunities. Managed by Nigel Thomas, it invests in a portfolio of 50 UK stocks of different sizes.

High risk: Active Capital Trust. An investment trust where the fund managers, headed by Bill Brown, pick shares in small companies, including those listed on the Alternative Investment Market.