A fund investing in UK shares is often the first port of call for UK-based investors.
And for good reason. The UK stock market is home to many world-class companies. From international giants selling their products and services across the globe to a diverse array of smaller businesses.
The UK is a rich hunting ground for fund managers. UK Growth funds aim to grow the value of an investor’s money over the long term, although each manager will go about this in a different way. Some focus on larger companies in the FTSE 100 Index, while others invest in higher-risk smaller or medium-sized companies, and some have the flexibility to invest in companies of any size.
Similarly, some fund managers are more constrained than others. Some aim not to deviate significantly from the performance of the broader stock market. Others have more freedom to take risks – they might invest in a small number of companies and run a concentrated portfolio, for example.
The overall makeup of the UK stock market is quite different to other global markets. For example, it includes more oil & gas and financial services companies than many of its peers. We think UK-focused funds can be used to diversify a portfolio of overseas funds. In particular, global funds tend to have a focus on the technology industry, an area that currently only makes up a small part of the UK market.
Our view
Many UK companies earn money from operations across the globe, so while they’re listed in the UK, lots of these businesses also operate around the world. This means they aren’t just reliant on the strength of the UK economy to thrive. However, it also means that the UK market can be sensitive to geopolitical developments, including the Russian invasion of Ukraine.
The UK is home to some exceptional fund managers with great track records of adding value. We think the UK is often a good starting point for investors, and most long-term growth portfolios should have some exposure
The decision of which funds to invest in can be difficult, so we’ve narrowed the field to those we think have the greatest long-term performance potential. They feature on the Wealth Shortlist.
