Shares and funds may not be at the top of every child’s Christmas
list but they could be the best gift of all if you pick the right ones.

Junior ISAs can be opened for any child from birth until age 16. These allow friends and relatives to invest up to £4,128 in a tax year on behalf of the account holder. Children gain control of their accounts at age 16 and are able to access the money at age 18. Some 907,000 Junior ISAs were opened in 2017/18 with a total of £902m squirrelled away into them.

The fact that kids can get their hands on these pots can put some parents off from opening the accounts, for fear they will squander
the money. But research from AJ Bell found that just 7% of children cash out their investments once they take over their Junior ISA.

Anecdotal evidence suggests that the more involved youngsters are with their investments, the more likely they are to continue them into adulthood.

Picking investments that appeal to areas they are enthusiastic about may further pique their interest. Here are four suggestions for stocks and funds to put in a Junior ISA.

Cineworld (CINE)

With a new Grinch movie and a sequel to Mary Poppins set for release over the festive period, young film fans may be fascinated to learn they can own a piece of the action.

Cineworld has expanded rapidly over the past few years, and the £2.4bn acquisition of US chain Regal made it the second largest cinema company in the world by number of screens. The group now has more than 9,500 screens across 793 sites in
10 countries.

Simon McGarry, senior equity analyst at Canaccord Genuity, says the firm has been at the forefront of improving the cinema experience. ‘New seating, bookable seats, new products such as 4DX, superior sound and premium screens have helped to “premiumise” cinema and make it far more immersive than home viewing,’ he explains.

After overhauling the UK market and expanding in the emerging European markets, Cineworld is now dong the same in the US. It generated a 15% total return for investors over the past year, which is the increase in the share price and dividends reinvested.

BMO Responsible Global Equity (3314504)

Other children may be interested to learn you can invest in companies trying to make a positive impact on the world.

The BMO Responsible Global Equity fund avoids businesses with damaging and unsustainable practices and uses its influence to improve those which it does invest in.

The fund contains names that may appeal to children including Apple and Mastercard as well as interesting businesses they might not have heard of such as consultancy group Accenture, which is a Fortune 500 company.

Around half of its assets are in US-listed firms, with other investments in Japan, Ireland and Germany. This fund has outperformed the MSCI World Growth index in four of the past six years.

First State Global Listed Infrastructure (B24HJL4)

Ben Yearsley, a director at Shore Financial Planning, says infrastructure is an area that may appeal to any young investor interested in trains, planes and automobiles.

The First State Global Listed Infrastructure fund invests in the shares of companies involved in the sector. This is a different approach to many infrastructure investment funds, which often directly own the assets themselves, and may mean it is more diversified and potentially less volatile than other offerings in the sector.

Yearsley says: ‘This is a core long-term holding and owns key assets such as airports and toll roads.’

Top holdings including the East Japan Railway Company, toll road operator Transurban Group, and US firm Crown Castle, which has more than 40,000 mobile phone masts across the US.

The fund has achieved 12.5% annualised returns over the past decade, better than the S&P Global Infrastructure index (10.3%).

Walt Disney (DIS)

For younger investors, Disney shares have obvious appeal. The group is behind popular franchises including Star Wars and the Marvel group of superheroes as well as Mickey Mouse and other classic characters.

Tom Becket, chief investment officer at Psigma Investment Management, says: ‘I suspect that up and down the western world, millions of children – and no small number of adults – will wake up to find that Santa has left them one or more of Disney’s products to keep them occupied this Christmas.’

Disney generated $59.4bn in revenue in the year to 29 September 2018 and a gross profit of $26.7bn. This could be boosted further in the future as the business prepares to launch a streaming service to rival Netflix and Amazon.

Becket adds: ‘Content is key and the list of Disney’s media possessions is vast and well-loved, providing a strong revenue stream potentially stretching decades into the future.’

Its shares are traded on the New York Stock Exchange and can be easily bought from most good UK stockbrokers or investment platforms.

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