There are three basic avenues for the ISA investor:-
This is the most common type of ISA arrangement. You take out an ISA with one of the institutional providers, and choose from its range of unit trusts, OEICs, investment trusts or exchange traded funds, the fund you want to put in it.
The number of funds you can choose will depend on the minimum initial investment accepted by the provider. If the minimum per fund is £1,000, you can choose up to 7 funds - so that your total investment does not exceed the £7,600 annual ISA allowance (or 10 funds from April 2010, thus not exceeding the new allowance of £10,100; this can be done earlier, from October 2009, for the over-50s). If the minimum is £2,000, you can only choose three funds, bringing your total investment to £6,000 (again, from October 09 or April 10, this could be 5 funds) accordingly .
An alternative is to invest in a range of funds from several different providers using an independent ISA wrapper.
You take out an ISA with an institution that acts as your plan manager, and 'import' the funds of your choice from various providers.
Some IFAs have linked their online ISA services to Fidelity FundsNetwork to enable their clients to select ISA funds from the market as a whole rather than just from one provider.
As we have seen, Stocks & Shares ISAs can hold domestic and foreign shares, collective funds, and corporate and government bonds.
If you want the flexibility to put any or all of these in your ISA, you may consider taking out a 'Self-Select' ISA, rather than limiting yourself to the products offered by an institutional provider.
To do this, you buy an independent ISA wrapper from a stockbroker and either administer the portfolio personally or employ the broker to do it for you. If you're handling the investment yourself, you might consider using an execution-only broker where no advice is given or asked and the dealing costs are competitive.
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