After almost a decade of rock-bottom interest rates and fragile economic prospects, investors have been prepared to pay up for any growth they can find. But are value stocks finally going to make a comeback in 2017?

As ISA season begins in earnest, let’s look at three of my favourite value and growth funds.

Growth funds

Quality growth funds have been very popular with investors for some years now, particularly as growth of any kind and income at a decent level has been increasingly hard to find. With a good manager behind them, growth funds should continue to do well, no matter what the economic climate, and we think they make good core holdings in a portfolio.

Baillie Gifford Global Discovery – Renowned for the quality of its in-house research, Baillie Gifford brought its small-cap teams together in 2011 to form the global discovery team. This fund consists of what the team believe to be the most innovative and fast-growing companies in the world.

Marlborough UK Micro Cap Growth – This is a small-cap growth fund managed by the renowned Hargreave Hale team. The fund is highly diversified and invests in firms with disruptive technologies or companies who are leaders in niche markets. The managers use their vast array of industry contacts and their own team to uncover the best new ideas.

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Rathbone Global Opportunities – Rathbone Global Opportunities is a global growth fund looking for simple, scalable businesses with entrepreneurial and flexible management teams. It has been managed by James Thomson for almost a decade. He has a contrarian philosophy, investing in undiscovered or out-of-favour growth companies. He believes there is a bias against growth companies, because the majority of active funds are value driven.

Value picks

Longer term, we suggest investors have a balance of both growth and value funds in their portfolios to avoid style bias. Now seems to be as good a time as any to dip a toe back into value waters.

R&M UK Equity Long Term Recovery – This fund aims to find companies that are yet to deliver on their promise – those experiencing below normal profit levels, which are depressing their valuations, but with the management capability to turn things around. Hugh Sergeant, the fund manager, said last year that “now continues to represent the best opportunity to buy value type shares since the end of the TMT bubble in 2000”.

L&G UK Alpha Trust – Run by the straight-talking manager Richard Penny, who describes himself as a “tight-fisted Yorkshireman” when it comes to his investments, this market capitalisation agnostic fund looks for bargains in all corners of the market and particularly where the manager believes it is inefficient.

Schroder Recovery – A true deep-value fund that invests in the cheapest and most unloved companies in the UK. Investors need to have a high tolerance for volatility, as this fund is liable to be at the bottom of the performance tables one year and the top the next.

Juliet Schooling Latter is research director at Fund Calibre