Funds and investment trusts allow savers to invest all around the world easily and at low cost but the wealth of choice can be baffling.
To help sort the wheat from the chaff, This is Money asks the professionals to come up with their best ideas for our 50 top funds round-up.
Our panel draws on the knowledge of experts in the investment world, including Bestinvest’s Jason Hollands, FundCalibre’s Darius McDermott, Quilter Cheviot’s Nick Wood, Interactive Investor’s Alex Watts, AJ Bell’s Laith Khalaf, and This is Money’s own Simon Lambert.
We asked these our experts to recommend the best funds and investment trusts that cover different investment sectors – and This is Money has included a selection of low cost passive tracker options too.
Cautious or risk-averse investors
Personal Assets invests in shares, bonds, cash and gold and aims to protect and grow investor’s wealth.
Jason Hollands, managing director of Bestinvest, says: ‘Personal Assets is an investment trust, managed by Sebastian Lyon, of Troy Asset Management, which invests on a multi-asset basis with a strong ethos of capital preservation.
‘Personal Assets Trust won’t blow the lights out in a raging bull market, but it does have a very strong record of protecting assets in down-markets while delivering solid, inflation beating returns over time.’ Ongoing charges: 0.65%
Ruffer Diversified Return aims not to lose money on any 12-month rolling basis, with a strong emphasis on providing genuine protection in times of market stress.
Darius McDermott, managing director of FundCalibre, says: ‘WS Ruffer Diversified Return fund is an absolute return vehicle which has the protection of investor capital at the heart of its process.
‘The fund is global and completely unconstrained, allowing the managers to invest across various asset classes, including equities, fixed income, currencies and derivatives – backed by a large desk of both macro and stock selection specialists.
‘Ruffer are the first to describe their process as ‘dull’ but it has delivered in numerous market conditions – making it a strong consideration for any investor with a reasonably high level of risk aversion.’ Ongoing charges: 1.12%
Ruffer Investment Company is an investment trust with a similar ethos to its fund cousin mentioned above. Managed by Duncan MacInnes and Jasmine Yeo, it looks to generate positive returns whatever the market environment.
Jason Hollands says: ‘It places a high emphasis on downside protection. In pursuit of this goal, it invests across a wide range of assets, including short-dated bonds, index-linked gilts, cash, gold, and global equities, as well as derivatives to provide downside protection.’ Ongoing charges: 1.08%
Blackrock European Absolute Alpha
Blackrock European Absolute Alpha invests across Europe, with a focus on capital preservation, and among its largest holdings are Ozempic-maker Novo Nordisk and the London Stock Exchange Group.
Darius McDermott says: ‘Being pan-European, this fund offers a very wide range of opportunities that includes the UK – opportunities are increased by the use of both a long and a short book.
‘It is rare to see a fund use both mainland Europe and the UK, especially when also using a multi-cap approach. This gives investors a vehicle that can provide balance and stability in portfolios, with returns unlikely to be correlated with other offerings.’ Ongoing charges: 0.92%
International Public Partnerships
International Public Partnerships is an investment trust which invests in global infrastructure markets, backing low risk assets including regulated assets and public private partnerships.
Nick Wood, head of fund research at Quilter Cheviot, says: ‘The holdings make returns very predictable and reliable. INPP is managed by a highly experienced and well resourced team at Amber Infrastructure who have delivered strong, consistent returns for investors over the life of the trust.
‘The infrastructure sector has fallen out of favour in recent years, as interest rates have risen and Bond markets have become more attractive. This creates an attractive opportunity to invest in INPP, with a dividend yield of almost 6.5 per cent.’ Ongoing charges: 1.20%
Baillie Gifford’s Managed Fund invests around the world, predominantly in shares, with some bonds and cash.
This is Money’s Simon Lambert, says: ‘This is a racier option than most funds billed as being for cautious investors and so is likely to be more volatile but it has a strong record of delivering growth based on an approach honed over 30 years.
‘It has low charges for an actively managed fund like this and holds about 75 per cent in equities, 20 per cent bonds and 5 per cent cash. Stock market exposure is broken into five regions: the UK, US, Europe, Emerging Markets and Developed Asia, with Baillie Gifford’s stock picking teams feeding in best ideas.’ Ongoing charges: 0.44%
Vanguard LifeStrategy – 40% equity or 20% equity
The Vanguard LifeStrategy funds allow investors to choose their risk levels and then hold a basket of assets that suits them, largely using Vanguard passive funds, across shares and bonds around the world.
Simon Lambert says: ‘Lifestrategy funds are cheap, simple and allow investors to move from the cautious end of the scale at 20 per cent equities, to the high risk at 100 per cent equities. Make sure you choose the right end of the scale for you. The more cautious options would be the funds that hold 40 per cent equities or 20 per cent equities.
‘Investors should note these are not pure global tracker funds though and skew towards the UK – with about a fifth of the equity proportions made up of a FTSE All Share tracker.’ Ongoing charges: 0.22%
Global
JPMorgan Global Growth & Income
JPMorgan Global Growth & Income aims to beat the MSCI All Companies World Index (ACWI) whilst also providing a yield equivalent to about 4 per cent of net asset value, paid quarterly.
Nick Wood says: ‘The fund predominantly selects from only JPMAM’s firm-wide highest conviction ideas (top 50-90) that offer superior earnings quality with a faster growth rate and at a similar price compared to the wider market.
‘Dividends are funded by a combination of revenue and capital reserves with half coming from a natural yield. This we believe is a key attraction of the fund with the ability to pay a market leading yield whilst also providing their best ideas from a total return perspective.’ Ongoing charges: 0.50%
The Blue Whale Growth Fund is managed by Stephen Yiu, with the fund gathering column inches as it is backed by Peter Hargreaves, co-founder of Hargreaves Lansdown, who is also the parent group’s chairman.
Simon Lambert says: ‘Blue Whale Growth Fund offers investors a tight portfolio of what Stephen Yiu and his team judge to be the world’s best companies (currently 28 stocks). It has now been running for almost seven years and has delivered strong returns over that period, racking up gains of 148 per cent since launch compared to the sector average 77 per cent – and outperforming in all but one year.
‘Yiu clearly articulates Blue Whale’s strategy and is willing to cut stocks loose or even buy some back if things change, as he has done with Meta recently. As a growth fund, returns can be volatile and Blue Whale suffered in the tech sell-off of 2022 – falling almost 30 per cent – but has since rebounded strongly.’ Ongoing charges: 1.09%
T. Rowe Price Global Focused Growth Equity
T. Rowe Price Global Focused Growth Equity fund invests in companies across the world, including emerging markets, which the manager believes have the potential for above-average and sustainable rates of earnings growth.
Darius McDermott says: ‘Manager David Eiswert uses their best ideas and builds a portfolio based on key themes to create a global equity fund with considerable potential for delivering long term returns across all market conditions.
‘He is able to do this thanks to the impressive strength and depth of the research team which is a real stand out feature of the fund. With the huge resources at T. Rowe, this fund should truly capture the growth style from the vast universe.’ Ongoing charges: 0.61%
Away from the well-known global investment fund giants, Guardcap’s Global Equity fund has been steadily building returns for investors.
Jason Hollands says: ‘The Guardcap Global Equity fund may not be a household name, but the two most senior members of the team behind this this fund – Michael Boyd and Giles Warren – have worked together for over 25 years.
‘They have developed a highly collaborative and successful approach focused on investing in a concentrated portfolio of circa 20 – 25 high quality, large companies that they believe can deliver sustainable earnings growth and be bought at attractive valuations.
‘This fund is a good alternative for investors who are perhaps already very heavily invested with the Fundsmith Equity fund and looking to diversify with another manager.’ Ongoing charges: 0.88%
Blackrock Global Unconstrained Equity
BlackRock Global Unconstrained Equity is a concentrated, high-conviction fund, targeting extraordinary companies across developed markets.
Darius McDermott says: ‘It takes a long-term approach which filters out short-term noise in the marketplace. We think this fund has a sound philosophy and strategy. It has the added advantage of being able to access the immense resources of BlackRock, as well as being run by two top-performing managers.
‘Alistair Hibbert and Michael Constantis have delivered exceptional performance for investors throughout their careers, and we have no hesitation in backing them on this fund. BlackRock Global Unconstrained Equity is still relatively young but has already delivered excellent performance since it launched in January 2020 despite the difficulties which many other quality growth strategies have experienced.’ Ongoing charge: 0.93%
Click here to resize this module
Fiera Atlas Global Companies is another fund that may not be on many investors’ radars and it invests away from the popular stocks found in many global funds.
Jason Hollands says: ‘The Fiera Atlas Global Companies fund, managed by a team led by Simon Steele is unapologetically focused on high quality growth companies. They target businesses with a competitive advantage, management teams that allocate capital wisely and which can deliver sustainable, double digit annual growth.
‘This a concentrated, benchmark agnostic fund of 27 holdings and differs considerably from the index and many other global funds which invariably own the ‘usual’ names. For example, its largest positions are in Gartner, Visa, Synopsys, Zoetis and IDEXX Laboratories, not the Magnificent Seven giants.’ Ongoing charges: 0.85%
The Mid Wynd International investment trust backs high-quality global equities using a thematic approach.
Darius McDermott says: ‘The trust completed the transfer of management from Artemis to Lazard Asset Management in October 2023 following the departure of the previous managers Alex Illingworth and Simon Edelsten.
‘Mid Wynd is a core option for any investor looking for a conservatively managed offering that taps into a number of global trends. The portfolio has been a consistently strong performer, whilst demonstrating lower volatility when compared to many of its peers.’ Ongoing charges: 0.61%
Wellington Global Stewards Fund
Wellington Global Stewards invests in 35 to 45 companies that display strong ESG considerations.
Alex Watts says: ‘Led by experienced co-managers Mark Mandel and Yolanda Courtines, the fund employs a rigorous investment strategy focused on long-term value creation, targeting a minimum holding period of 10 years.
‘This strategy involves thorough qualitative research with a long-term outlook, as well as extensive short-term fundamental analysis.’ Ongoing charges: 0.65%
Tracker fund: SPDR iShares MSCI ACWI
The SPDR iShares MSCI ACWI ETF invests around the world and includes emerging markets with a total expense ratio of just 0.2 per cent. The ETF is weighted by the market size of the world’s major stockmarkets, with the largest chunk at 65.4 per cent invested in the US. The UK makes up 3.3 per cent of the ETF and is its third biggest holding, behind Japan at 5.2 per cent. China makes up 2.5 per cent and India 2 per cent. Ongoing charges: 0.2%
Tracker fund: L&G Global Equity ETF / L&G International Index Trust
Legal & General’s Global Equity ETF is one of the cheapest ways to track the world’s stock market, following the Solactive Core Developed Markets Large and Mid Cap Index. Its sister fund, L&G International Index gives access to companies around the world but excludes the UK. That makes it a good option for global exposure for UK investors who already have plenty of home bias in their portfolios. Ongoing charges: 0.10% / 0.13%
Vanguard LifeStrategy 80% Equity
This is the more stock market heavy version of Vanguard’s LifeStrategy range, with a 100 per cent equity option also available above that.
Simon Lambert says: ‘Vanguard’s more equity heavy options of the LifeStrategy funds are a good option for an investor looking to build their portfolio’s exposure to global stocks. They are cheap and simple, allowing investors to adjust their risk level from cautious, at 20 per cent equities, to high risk at 100 per cent equities.
‘As mentioned previously, investors should be aware that these funds are more weighted towards the UK than a true global index, with their equity portion holding about a fifth in the FTSE All Share.’ Ongoing charges: 0.22%
Bonds
Invesco Corporate Bond invests at least 80 per cent of its assets in investment grade corporate debt securities, with top holdings including NatWest, Barclays, and Nationwide Building Society.
Darius McDermott says: ‘The team uses the flexibility within the fund’s sector guidelines to full effect and they run the portfolio with a pragmatic and proactive style. Over the years, their process has resulted in strong returns for investors.
‘This fund’s experienced managers make the most of the considerable analyst resource at their disposal to build an unconstrained fund, which has the flexibility to navigate its way through the large sterling corporate bond sector. For investors who are proponents of actively-managed funds, Invesco Corporate Bond makes for a compelling choice within its sector.’ Ongoing charges: 0.50%
Bonds are meant to be the safer part of investors’ portfolios but the warping effect of the low interest rate world, followed by the swift rise in rates, has created the potential for lots of volatility. Invesco Tactical Bond aims to avoid the risks and profit from that.
Jason Hollands says: ‘Invesco Tactical Bond is a ‘strategic bond fund’, which means it has the flexibility to invest across the bond markets, including government bonds and corporate bonds, depending on where the managers – Stuart Edwards and Julien Eberhardt – see the greatest opportunities.
‘However, while it has a flexible brief it is managed cautiously and has demonstrated consistent defensive return characteristics with low volatility, whilst still outperforming its benchmark.’ Ongoing charges: 0.70%
A blend of corporate and government bonds are held in Jupiter Strategic Bond Fund and managers Harry Richards and Ariel Bezalel will take on riskier bonds when they see fit.
Alex Watts, investment data analyst at Interactive Investor, says: ‘Jupiter Strategic Bond Fund is a ‘go anywhere,’ high-conviction fund, meaning the managers are able to seek out the best opportunities within the fixed-interest universe on a global basis while carefully managing downside risk.
‘The fund has shown strong performance and resilience over the long term and provides an attractive yield. Given the fund’s flexibility and focus on downside protection, this makes it a strong core option for investors within a well-diversified portfolio.’ Ongoing charges: 0.74%
Man GLG High Yield Opportunities
Man GLG High Yield Opportunities is an unconstrained, concentrated global high yield bond fund, driven by individual bond-picking but guided by thematic ideas.
Darius McDermott. says: ‘Manager Mike Scott is ably supported by a team of internal credit analysts who conduct a rigorous analysis of every potential holding and their ability to meet debt obligations.
‘Mike has demonstrated excellent stock-picking ability throughout his career. His experience, and the fund’s flexibility, allows him to find opportunities others may miss or avoid. The concentrated portfolio offers a different but attractive return profile to his competitors.’ Ongoing charges: 0.75%
TwentyFour Absolute Return Credit Fund
Bonds with a remaining life of up to five years are held by TwentyFour Absolute Return Credit Fund.
Jason Hollands says: ‘Unlike many funds that carry ‘absolute return’ in their names and use sophisticated investments as part of their strategies, this fund has a simple but effective strategy of focusing on short-dated bonds to minimise volatility.
‘Manager Chris Bowie invests a minimum of two thirds of the portfolio in investment grade bonds with less than five years until maturity. This has produced very consistent returns at low levels of volatility. In my view this fund is a good choice for more risk averse investors.’ Ongoing charges: 0.54%
Premier Miton Corporate Bond Monthly Income
Premier Miton Corporate Bond Monthly Income aims to provide a monthly income to its investors, with a minimum of 80 per cent of the portfolio held in sterling denominated investment grade-rated corporate bonds – invested in a range of sectors, including financial and utility companies.
Nick Wood says: ‘It is smaller and more nimble than many of the other funds in the sector. The fund has a strong bias towards high-quality investment grade debt and benefits from yields close to 6 per cent.’ Ongoing charges: 0.35%
PIMCO Global Investment Grade Credit Fund
A diversified portfolio of investment grade corporate bonds is the backbone of PIMCO Global Investment Grade, which does what it says on the tin.
Alex Watts says: ‘Managed by Mark Kiesel since its launch, the PIMCO Global Investment Grade Credit fund seeks to maximise total returns to investors and outperform the Bloomberg Global Aggregate Credit Index, by focussing on the higher-quality end of the bond market.
‘Overall, this fund offers diversification benefits and strong income potential from a broad portfolio of investment grade corporate bonds, while seeking to retain many of the defensive features of government bonds.’ Ongoing charges: 0.49%
Tracker fund: Vanguard Global Bond Index Fund
The Vanguard Global Bond Index Fund is a passive tracker that invests in 14,622 investment-grade bonds and seeks to track the Bloomberg Global Aggregate Float Adjusted and Scaled Index. It is hedged to minimise currency volatility affecting returns.
Most holdings are government bonds, and 44 per cent is weighted to the US, followed by 6 per cent in Japan and 6 per cent to France. It is a low-cost way to increase your exposure to global bonds, and the income share class pays out a quarterly dividend. The current yield is 2.90 per cent. Ongoing charges: 0.15%
UK companies
Schroder Recovery describes itself as ‘an active value investing fund focused on the equities others avoid.’ It looks for stocks with recovery characteristics, such as those that have suffered either a temporary setback in profits or share price.
Darius McDermott says: ‘This is a patient and deep value-driven fund, investing in companies valued at less than their true worth and waiting for a correction.
‘This recovery fund has been run by the same lead manager since 2006, with a continuity of process and a very consistent track record – the team has now proven itself for nearly two decades. The deep value style does lead to periods of underperformance but the core discipline of buying cheap stocks has given good long-term outperformance.’ Ongoing charges: 0.91%
Artemis UK Select runs a focused portfolio of 40 to 60 stocks and typically focuses on companies in the FTSE 350.
Jason Hollands says: ‘Artemis UK Select is a ‘best ideas’ UK equity fund managed by Ed Legget and Ambrose Faulks, which has the flexibility to roam across the UK markets backing companies of all different sizes.
‘The managers seek out companies they believe have great earnings growth prospects but where they believe the current valuations are too low and therefore have the potential to be rerated.
‘A notable feature is that it has the additional flexibility to take selective short positions in stocks the managers believe have got too expensive or could see share price declines.’ Ongoing charges: 0.82%
Liontrust’s Special Situations fund invests across the FTSE 100, FTSE 250 and Aim markets, looking for companies with a competitive advantage.
Darius McDermott. says: ‘Liontrust Special Situations is a ‘best ideas’ portfolio, which encompasses any UK stocks regardless of size or sector, but typically will have a small-and mid-cap bias.
‘Long-term risk adjusted returns have been outstanding. For investors wanting high-conviction, multi-cap exposure to the UK stock market, this fund ranks among the best.’ Ongoing charges: 0.81%
The WS Evenlode Income fund is managed by Chipping Norton-based boutique Evenlode Investments, founded by Hugh Yarrow. It does not invest in highly cyclical and economically sensitive sectors like energy or banking, and runs a concentrated portfolio of around 40 holdings.
Jason Hollands says: ‘The managers back cash generating companies able to grow their dividends on a long-term, ‘buy and hold’ basis. They particularly favour “capital-lite” businesses, i.e., those which do not require heavy investment to replace plant and machinery.
‘Though a UK fund, the types of companies backed tend to earn revenues globally and are not narrowly focused on the UK economy. Significant holdings include RELX, Diageo, Unilever and Reckitt.’ Ongoing charges: 0.87%
City of London Investment Trust
City of London Investment Trust with its 4.74 per cent yield is a popular option for income-seeking investors, and a so-called dividend hero, having increased dividends for 57 consecutive years.
Nick Wood says: ‘City of London’s record can be attributed to the fund’s focus on investing in fairly priced UK listed companies with robust business models that can grow dividends over time.
‘The fund’s success is also due to the unwavering dedication of Job Curtis, who for 33 years, has maintained a disciplined approach to stock selection with the aim of maintaining a broad spread of investments. By not taking excessively large stock or sector positions, Job aims to allow stock selection to drive performance as it has done so for many years.’ Ongoing charges: 0.37%
Tracker fund: Legal & General UK Index
The Legal & General UK Index is a FTSE All Share tracker fund that follows the broad UK stock market. It has a 0.1 per cent ongoing charge, so is very cheap and is big enough to hold all the companies in the index. This is a great simple UK tracker fund for passive investing. Ongoing charges: 0.10%
Tracker fund: State Street SPDR FTSE UK All Share ETF
For investors who prefer to use ETFs to track a market, the State Street SPDR FTSE UK All Share ETF has a simple aim – to track the performance of the broad UK equity market, with a low 0.2 per cent ongoing charge.
It follows the UK’s FTSE All-Share index, which includes the FTSE 100, 250 and FTSE Small Cap stocks that make up all those listed on the London Stock Exchange’s main market. This covers 98 per cent of UK listed companies by market cap, but excludes AIM stocks. Ongoing charges: 0.20%
Income
Man GLG Income is a UK equity fund investing across small, medium and large caps.
Laith Khalaf, AJ Bell’s head of investment analysis, says: ‘Fund manager Henry Dixon is very experienced and his analytical mindset provides a level of pragmatism that allows the fund to navigate through a variety of market conditions. He is ably supported by a small number of portfolio managers and analysts.
‘The team seek out undervalued and unloved companies through identifying two types of stocks, those trading below their replacement cost and those where the market appears to be undervaluing profit streams. Given the focus on generating income, all stocks held must have a yield in line with the market.’ Ongoing charges: 0.90%
Temple Bar invests in a concentrated portfolio of around 30 dividend-generating, large and mid cap companies. Three quarters of the trust is in UK companies, with the bulk of the rest in European stocks.
Simon Lambert says: ‘Temple Bar investment trust has been managed by Nick Purves and Ian Lance since October 2020 and offers an opportunity to back UK stocks that the value-oriented managers judge to be too cheap’, says Simon Lambert. (Watch our video interview with Temple Bar’s Ian Lance)
‘The bonus for investors is that this comes with dividend income too and the trust yields about 3.5 per cent. The managers look for shares trading at attractive valuations relative to their intrinsic value and are willing to take contrarian positions with a long-term view.’ Ongoing charges: 0.56%
M&G Emerging Markets Bond Fund
M&G Emerging Markets Bond Fund invests in a diverse portfolio of emerging and frontier markets bonds and delivers a near 7 per cent yield. Among the top countries it invests in are Brazil, Indonesia, South Africa and Mexico.
Laith Khalaf says: ‘The fund’s long-term performance has been very impressive, outperforming its composite index in all but one calendar year since its 2013 launch.
‘The neutral split across (two third) government and (one third) corporate bonds, as well as (two third) developed market and (one third) emerging market currencies, results in a diversified portfolio by risk factors. The team’s bottom-up credit selection tends to then generate a higher yield than the composite index, given the team’s preference for both high yield issuers as well as peripheral country bonds.’ Ongoing charges: 0.70%
Tracker fund: Vanguard FTSE All-World High Dividend Yield
Vanguard’s ETF provides investors with exposure to a broad portfolio of stocks, tracking the FTSE All-World High Dividend Yield Index.
The index is comprised of around 2,000 large and mid-sized companies, excluding real-estate trusts, in both developed and emerging markets. Its largest weighting is to North America, which accounts for around 47 per cent, with 25 per cent invested in European companies. It provides an attractive 3.17 per cent dividend yield at a low-cost. Ongoing charges: 0.29%
Emerging markets
FP Carmignac Emerging Markets is a high-conviction fund targeting attractive growth amongst large and medium-sized emerging markets companies.
Darius McDermott says: ‘This fund’s active, benchmark agnostic approach within the diverse landscape of emerging markets has provided excellent performance since its inception.
‘The fund specifically targets cash generative businesses in under-penetrated sectors in emerging economies, with healthy macroeconomic fundamentals. We feel this fund is a strong consideration for anyone looking for active emerging markets exposure.’ Ongoing charge: 0.95%
Templeton Emerging Market is an investment trust with a long history of returns and was run for years by famous manager Mark Mobius, before he left to start up his own eponymous investment trust.
Jason Hollands says: ‘Templeton Emerging Markets is the granddaddy of emerging markets investing, having done so since 1989. It is now managed by Singapore-based Chetan Sehgal and Edinburgh-based Andrew Ness, of Franklin Templeton.
‘It’s a diversified trust that invests in emerging market companies from Asia to Latin America and is currently overweight South Korea and Brazil, with notable themes currently being technology and financials.’ Ongoing charges: 0.97%
FSSA Global Emerging Markets Focus
FSSA Global Emerging Markets Focus invests in 40-45 large and medium sized companies across emerging markets.
Darius McDermott says: ‘Manager Rasmus Nemmoe has an absolute return mindset and looks for quality companies that can demonstrate sustained and predictable growth over the long-term. He achieves this through a bottom-up, benchmark agnostic approach.
‘The fund also has a strong environmental, social and governance ethos without labelling itself as such. The fund has already delivered strong returns over its benchmark during Rasmus’ tenure.’ Ongoing charges: 0.60%
TM Redwheel Global Emerging Markets
TM Redwheel’s Global Emerging Markets is a relatively small fund at just over £100million that offers a different approach to larger rivals.
Jason Hollands says: ‘The TM Redwheel Global Emerging Markets fund differs from many of its rivals by having the flexibility to also invest up to 20 per cent in ‘frontier markets’ such as Vietnam and Kazakhstan as well as major emerging markets such as China, India, Brazil and South Korea.
‘Manager John Malloy seeks to identify growing companies with strong sustainable cash flows at attractive valuations. We like the fund’s active engagement with its holdings, including on ESG risks, and believe that its exposure to both Emerging and Frontier markets gives it a more diversified portfolio than many of its peers.’ Ongoing charges: 1.25%
Tracker fund: iShares Emerging Markets Equity Index
The iShares Emerging Markets Equity Index is a straightforward way to build exposure to emerging markets with ongoing charges of just 0.21 per cent. It invests in around 1,700 countries across emerging markets but be aware that a big chunk of money ends up in China, at 28 per cent.
Among the next largest holdings are India at 23 per cent of the portfolio, Taiwan at 21 per cent and then Brazil at 5 per cent. Technology and financial stocks dominate the index, accounting for almost half, with consumer stocks behind them at 11 per cent. Ongoing charges: 0.19%
Adventurous
Big technology stocks have richly rewarded investors in recent years but there are concerns over the high valuations of some of the giants. Choosing an actively-managed fund or investment trust like Allianz Technology, which still contains many of those giants, may be one way to allay those fears.
Jason Hollands says: ‘Allianz Technology Trust is our key pick for a specialist technology portfolio. Managed by Mike Seidenberg it has a repeatable and robust bottom-up investment process, looking at growth, quality, and valuation characteristics.
‘The portfolio offers good diversification across sub-sectors. It also employs a high-conviction strategy, heavily weighted towards the US and with a focus on large/mid cap companies. The team is always talking to people and trying to learn what consumers and enterprises are going to do in the technology space.’ Ongoing charges: 0.70%
Comgest Growth Japan looks to cherry-pick from this major market, which has made good recent gains but can be a tricky prospect for investors.
Darius McDermott says: ‘Comgest Growth Japan is a concentrated portfolio of only 30-40 high quality long-term growth Japanese companies. Each holding has been bought with a three-to-five-year outlook.
‘The fund uses the same well-defined process that the company has used successfully for all its strategies over three decades. But at the same time, the company allows its managers to run their funds with complete freedom, in turn letting their stock-picking skills to shine. The team has an unconstrained approach and has demonstrated good active management in a region which has, in the past, made it difficult for managers to show their edge.’ Ongoing charges: 0.90%
HG Capital Trust is a private equity investment trust, which primarily invests in private companies in Europe, but increasingly in the US, that offer business critical software and services.
Nick Wood says: ‘The strategy gives exposure to profitable businesses with highly recurring revenues that are growing profits and revenues in aggregate by around 30 per cent a year with exposure to strong, structural tailwinds of AI and improving worker productivity.
‘HG Capital has a highly experienced and deep resource that supports their investee companies to grow their business over the typical five to seven year holding period. In private markets that have proven very challenging in the past two years, HGT appears very well set to take advantage, with a portfolio of strong businesses trading well and accelerating growth and crucially significant liquidity to take advantage of attractive opportunities in a recovering market.’ Ongoing charges: 1.70%
India’s stock market is flying high – it’s Nifty Fifty and Sensex indices have more than doubled over five years – and its economy is growing quickly, but this is another market where active stock-picking like Ashoka India Equity’s could help avoid pitfalls.
Jason Hollands says: ‘I’m a huge long-term bull on India, the world’s most populated country, which has a young and rapidly expanding population and growing middle class. This trust is managed by Prashant Khemka of White Oak Capital Partners, a Singapore based firm he heads, having previously managed Indian and Emerging Markets funds at Goldman Sachs.
‘An unusual feature is that the trust charges no fixed annual management fees, but instead takes 30 per cent of returns over and above the performance of the MSCI India IMI Index (subject to a cap), so the managers only get paid when they are beating the market.’ Ongoing charges: 0.32% (performance fee)
Fidelity China Special Situations
Fidelity China Special Situations, run by Dale Nicholls, invests in undervalued Chinese businesses, with a bias towards small and mid caps. It has an allocation of up to 15 per cent in unlisted, which it currently maximises.
Alex Watts says: ‘Investors ought be aware of the heightened risk profile that the trust may bear on account of high gearing levels, discount volatility, private company exposure and allocation to smaller companies, as well as the macro uncertainty associated with investment in China.
‘However, Nicholls’ own expertise and knowledge of the region, as well as the wider resource of Fidelity’s analyst team, positions the trust well to benefit from China’s structural growth and the rise of the Chinese consumer. A long-term track record of outperformance is testament to the trust’s capacity to generate superior returns through its adventurous strategy over time.’ Ongoing charges:0.98%
Scottish Mortgage is a hugely popular investment trust that has rewarded long-term adventurous investors, although recent performance has been disappointing and that means it is still trading on an 8 per cent discount.
Alex Watts says: ‘Managed by Tom Slater and Lawrence Burns, it looks to invest in innovative growth companies that will be future winners, but this can make for extreme short-term performance, both to the upside and downside.
‘Furthermore, a unique asset of the investment trust structure is the ability to borrow to enhance returns to investors, and this is a facility readily used by the trust. While this can augment returns, it means that negative returns can be exaggerated also. Accordingly, this is a trust more appropriate for investors with longer investment horizons of at least five years.’ Ongoing charges: 0.35%
The Worldwide Healthcare Trust invests in global pharmaceutical and biotechnology companies and is managed by OrbiMed, the world’s largest specialist healthcare fund management company.
Laith Khalaf says: ‘The trust has a growth approach to what is traditionally a more defensive industry within equity markets. The strategy’s three and five-year relative returns are disappointing, predominantly driven by the portfolio’s large weightings within emerging markets and the emerging biotech sector, as well as the accompanying underweight to large cap pharma.
‘The trust has also swung to a near 10 per cent discount over the period. However, the managers believe that fundamentals within biotech remain attractive, with supportive valuations and increasing M&A expected across the sector, particularly given the increased investor attention towards innovation within drugs and related technology.’
‘Given the calibre of the investment team and looking at the longer-term success of the strategy within the OrbiMed franchise, the Worldwide Healthcare Trust provides a compelling investment proposition within the healthcare space.’ Ongoing charges: 0.90%
Odyssean Investment Trust is a UK smaller companies trust that takes a different approach to many rivals, holding a highly concentrated portfolio and seeking to actively engage with the companies it holds.
Simon Lambert says: ‘For many investors the lure of smaller companies is strong, with interesting stories, nimble businesses and the potential for big share price gains combining to create a major attraction. The flipside of this is that small caps can also be a minefield for stock-picking personal investors if things go wrong.
‘One way to try to benefit from the substantial upside of UK smaller companies – which are widely considered to be heavily undervalued – while mitigating your risks is to choose an investment trust run by active stock-pickers.
‘Odyssean offers a very active way to do this with managers Stuart Widdowson and Ed Wielechowski running a £215million portfolio of just 25 stocks, in which the top ten dominate. The managers say that they “constructive corporate engagement is a key part of Odyssean’s approach”, as they seek to get the smaller companies they hold to grow and deliver returns for shareholders. The trust has a strong performance record and trades at a slight premium but is a higher risk proposition.
‘Investors seeking a broader UK smaller companies trust could consider BlackRock Smaller Companies or Throgmorton.’
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.
