Top 50 funds to invest in now - part one
31st July 2015 13:47
Given the prolonged period of ultra-low interest rates, more Britons than ever before are piling into the stockmarket. According to trade body, the Investment Association, collectively we now have £899 billion invested in funds - pooled investment schemes sometimes referred to as unit trusts or OEICs.
But investing can be a tricky business, given the plethora of products on offer. In addition, investing is also a long-term business and there will be ups and downs, so patience is key. While there is no shortage of funds to choose from, finding fund managers who can deliver consistently is another matter. Rob Gleeson, head of FE Research, a fund analyst, explains: "Generally, the most consistent managers are the ones with a strong core strategy. While they will have ups and downs across the business cycle, over multiple cycles they offer relatively stable returns."
To give you an idea of where you might want to squirrel away some cash, we've picked out 50 fund choices, as recommended by some of the UK's top fund-pickers. Our panel includes: Darius McDermott, managing director of brokers Chelsea Financial Services; Mark Dampier, head of research at Hargreaves Lansdown; Gavin Haynes, managing director of Whitechurch Securities; and Adrian Lowcock, head of investing at AXA Wealth.
- Top 50 funds to invest in now - part two - Top 50 funds to invest in now - part three
Equity funds
UK All Companies
The most popular fund type, UK All Companies portfolios, have the explicit remit of aiming to grow their investors' cash by investing in the shares of British listed firms.
Five-year return: 89%
Manager and ex-Schroders man Richard Buxton looks to maximise capital growth by investing in a very concentrated portfolio of just 35 to 40 stocks. Lowcock says: "Buxton is very good at mining out good long-term growth opportunities."
Five-year return: 77%
Tipped by Haynes, the fund has been managed by Derek Stuart since its March 2000 launch and boasts an impressive track record in seeking out under-loved stocks. It counts and among its top holdings. Haynes says: "The manager has a strong record as a stockpicker, looking for turnaround and recovery plays in the UK stockmarket."
Five-year return: 133%
With around 24 stocks, this is a highly concentrated fund, which is run by Nick Train. Dampier asserts he holds the manager in "high regard".
UK Equity Income
These funds deliver capital growth and a steady and rising income stream by investing in dividend-paying firms.
Five-year return: 95%
Lowcock backs this fund, managed by Richard Colwell and Leigh Harrison. and are among their current favoured plays.
Up 88% since 2011 launch
The manager Siddarth Chand Lall ventures into the smaller company space where other income funds fear to tread, says McDermott. He says: "The acclaimed stockpicking ability has led to significant outperformance since the fund launched in July 2011."
Up 16% since launch
Launched only last year, the portfolio is run by Neil Woodford who managed to turn £10,000 into £230,000 over 25 years during his time at Invesco Perpetual. Dampier says: "The CF Woodford Equity Income has been an exceptional start for the manager and his new fund."
Europe ex-UK
Despite Europe's economic woes, this sector houses some top names including L'Oreal and BMW.
Five-year return: 70%
Run by Oliver Russ, he looks to achieve a high-income yield, targeting 5% as well as some long-term capital growth. Haynes says: "It offers an income-focused approach to European equities, while hedging out the currency risk."
Five-year return: 85%
This fund is run by Dave Dudding, who aims to pick high-quality companies that have the potential to generate superior returns. McDermott says: "It has been a top performer in recent years and is especially strong in down markets."
Five-year return: 77%
Lowcock and Dampier both tip this fund, which until recently was known as Henderson European Special Situations. Its manager Richard Pease has moved firms and rebranded it. Dampier says: "He has built a formidable reputation."
Global Equity Income
These funds invest in global dividend-paying firms.
Up 101% since July 2010 launch
Picked by Haynes and McDermott, the latter says: "We think this is one of the strongest funds in the sector."
Five-year return: 64%
A favourite of all our fund pickers, it boasts a historic yield of 3.37%. is among its top holdings.
Five year return: 68%
Also tipped by McDermott, the lead manager is Paul Ehrlichman. The fund selector believes the manager "takes a very different approach with peers" and as a result will often invest in parts of the market that others are sidestepping or missing altogether.
Global
The Global sector consists of funds looking to deliver capital growth by investing in companies all across the globe, and therefore offer very wide diversification.
Up 97% since November 2010 launch
Tipped by Haynes, the fund invests in high-quality, well-established companies. Managed by Terry Smith, rather than trying to find tomorrow's winners, his philosophy is "to invest in companies that have already won". He favours resilient businesses whose advantages are difficult to replicate.
Up 86% since March 2011 launch
Highlighted by Lowcock and Dampier, this is another high-conviction play, given it contains only around 26 holdings. Dampier asserts that managers Nick Train and Michael Lindsell "adopt a unique investment approach, which has led to a long history of outperformance".
Five-year return: 68%
The fund seeks long-term capital growth shares of companies located anywhere in the world. Haynes, a fan of the process, says: "The fund is fronted by Dylan Ball, who seeks out-of-favour, cheaper areas of global equity markets."
Japan
Japan has endured its share of economic challenges but the government is pumping cash into the nation, via quantitative easing and many believe the land of the rising sun is on the precipice of a new economic age.
Five-year return: 74%
McDermott and Haynes both tip this fund. It defi nes "high conviction", says McDermott. He highlights that back in 2008, its manager Chris Taylor, managed to deliver a massive 84% return as a result of his successful calls, while most other funds posted large losses.
Five-year return: 58%
Lowcock points to Schroder Tokyo. He says manager Andrew Rose is very skilled at identifying strong investment opportunities. Dampier adds: "Rose is an experienced fund manager with a process that has led to impressive levels of outperformance."
Five year return: 42%
Haynes also rates Jupiter Japan Income. Run by Simon Somerville, he looks to achieve long-term capital as well as income growth. Its top investments include household names Toyota and Panasonic. Haynes says: "This fund offers an equity income approach to Japanese equities, looking to exploit the increasing focus on dividends in this market."
North America
As the world's biggest economy, investors can't ignore the US. Uncle Sam has bounced back from the financial crisis faster and stronger than anywhere else, with its market reaching new highs.
Five-year return: 97%
Past performance shows that many stockpicking or active fund managers struggle to outperform the US market, simply because it is so big and heavily researched. As a result, many investors opt for lower-cost tracker funds, which mirror the performance of the market. As a result, Haynes tips the Legal & General US Index fund, saying: "The US stockmarket is notoriously hard to outperform, so a low-cost index tracker is good for core exposure."
Five-year return: 97%
One of Lowcock's favourite funds in the sector is JPMorgan US Equity Income, which aims to deliver both an income and capital growth. Its manager Clare Hart invests in highquality companies that have "strong brands, stable profits and the ability to return cash to shareholders through a sustainable dividend".
Five year return: 131%
Tipped by McDermott, the fund's manager Richie Freeman has been at the helm since 1983 while Evan Bauman has been comanager on the fund since 2009. "The managers have built a long and impressive track record while running this fund," says McDermott.
Global Emerging Markets
This style of fund invests in the world's burgeoning and quickest growing economies, such as Brazil, India and China. Definitely at the higher end of the risk spectrum but for the intrepid the potential gains can be a big draw.
Up 8% since July 2012 launch
This fund looks to deliver income while participating in long-term growth. Its management team invests across a wide spread of countries, including Taiwan, Turkey, South Africa and China. Haynes is a fan, as is Lowcock.
He says: "The team has a lot of expertise and the income focus adds extra discipline when it comes to selecting stocks."
Five-year return: 31%
Aberdeen is a known emerging markets specialist and this fund's long-term performance holds up. The portfolio, which as its moniker makes obvious, invests in smaller companies across the region. Tipped by Lowcock, the fund is at the higher end of the risk curve.
Five-year return: 7%
Run by Matthew Vaight since launch in 2009, McDermott highlights that the manager heads up the fund with the intention of "finding companies that other managers have not". For his part, Vaight believes the combination of long-term growth trends and improving corporate culture will make emerging markets an exciting asset class for years to come.
Asia Pacific ex Japan
These equity funds are typically on the higher end of the risk scale and generally invest, among many others, in Malaysia, Singapore, the Philippines and Australia.
Five-year return: 64%
Backed by all our fund pickers, the portfolio is run by veteran manager Angus Tulloch, who has more than 30 years' experience managing investments in the region. "He takes a conservative investment approach and his long-term track record is outstanding says Dampier.
Five-year return: 55%
This fund, backed by Lowcock, aims to achieve income together with long-term capital growth. Its former manager Jason Pidcock stepped down in May and the fund is now under the responsibility of the wider team.
Up 63% since November 2012 launch
Tipped by Haynes and McDermott, the fund is run by Jonathan Pines. McDermott says: "It's run by a highly disciplined team, investing in high-conviction stocks trading cheaper than expected relative to quality."
Part two and three will be published next week.
This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
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