10 best UK funds and trusts

A panel of collective investment experts sharesome choice UK-oriented funds and investment trusts they think investors should keep in mind.

JOHCM UK Dynamic

Core growth and income - 1 yr +0.2%; 3 yrs +38.9%; yield 3.4%

One aspect of JOHCM UK Dynamic that particularly appeals to Gavin Haynes is that fund man­ager Alex Saviddes has a clearly defined investment process, focusing on recovery-type stocks that have generated strong risk-adjusted returns over the years. Haynes says: "The fund provides value/contrarian UK equity exposure with an income and growth bias, which I believe are strong philosophies to employ."

Old Mutual UK Mid Cap

Adventurous growth - 1 yr +22.2%; 3 yrs +81.9%; yield 0.5%

Consistency is a feature that Brian Dennehy particularly values; he says Old Mutual UK MId Cap's track record of outperform­ing its peers over both longer and more recent periods makes it a winner for him. Managed by Richard Watts, it invests in a broad range of UK mid-cap companies. Watts adopts a flexible approach, so he can adapt to different economic condi­tions.

CF Miton UK Smaller Companies

Adventurous growth - 1 yr +11.8%; 3 yrs n/a; yield 0%

Managed by industry veteran Gervais Williams, CF Miton UK Smaller Companies invests in genuinely small companies. Robert Burdett is keen because, he says, "this area is at a rare his­torical discount to the broader market". He also believes smaller companies are less risky at this point of the economic cycle than they are often perceived to be; moreover, "with careful selection many smaller companies can find profitable niches whatever the economic weather".

Majedie UK Income

Growing income and growth - 1 yr +5.6%; 3 yrs +63.1%; yield 4.3%

There are many UK equity income funds to choose from, but Mick Gilligan is attracted to Majedie UK Income because of the manager's investment process. He explains: "It is designed to identify com­panies undergoing operational improve­ments, with a valuation that does not reflect the improving prospects. This focus on 'self-help' situations means the fund is less reliant on overall market direction."

Schroder Income Maximiser

Immediate income - 1 yr -4.4%; 3 yrs +24.1%; yield 7.7%

Investors in search of a high and stable yield should consider an enhanced equity income fund, says John Husselbee. Schroder Income Maximiser takes this approach. It targets a yield of 7% through a portfolio of high-yield equities. By writing options on these shares, extra income is generated in exchange for giving up some of the poten­tial for capital gains.

BlackRock Throgmorton Trust

Core growth - SP 1 yr +27.1%; 3 yrs +82.6%; yield 1.4%

Smaller UK companies have outperformed larger companies over the long term, and John Newlands believes Blacrock Throgmorton IT's two-pronged strategy makes it a excellent way to gain exposure. He explains: "The conventional investment portfolio, which is ably man­aged by Mike Prentis, is complemented by a long-short strategic overlay, achieved via a sub-portfolio of contracts for difference. Though not an area for the beginner, this is a logical approach and should not put investors off."

Perpetual Income & Growth Trust

Core growth and income - SP 1 yr +7.2%; 3 yrs +60.4%; yield 3.4%

Peter Hewitt and Tim Cockerill both opt for Perpetual Income & Growth, managed by Barnett since 1999. Hewitt says that while it may lag a little in roaring bull markets, it is never far off the pace and dividend growth has been strong. "Barnett favours companies with strong balance sheets and predictable cash flows, does not like cyclicals, and has steadfastly avoided miners and banks," he says. Cockerill adds that Barnett is supported by an experienced team whose macroeconomic view is criti­cal to the investment process.

Edinburgh Investment Trust

Core growth and income - SP 1 yr +12.8%; 3 yrs +57.5%; yield 3.3%

Andrew McHattie prefers Edinburgh IT, also managed by Barnett since he took over from Neil Woodford in January 2014. "Smaller companies have been the place to be in the UK for the past three years, but faced with possibly tougher conditions in 2016 it seems sensible to head towards the mainstream, and they don't come a lot more mainstream than Edinburgh IT," McHattie declares.

Aberforth Smaller Companies Trust

Core growth and income - SP 1 yr +7.5%; 3 yrs +81.9%; yield 2.2%

Despite dull returns in 2015, Aberforth Smaller Companies is the preferred route into UK smaller compa­nies for Alan Borrows. "Aberforth Partners is the best-resourced value-oriented manager in the sector," he says. "With easy money sloshing around, value investing has struggled, but we are convinced it will work over the long run."

Diverse Income Trust

Adventurous growth and income - SP 1 yr +21.4%; 3 yrs +82.5%; yield 2.7%

The Diverse Income trust, run by Miton, appeals to Jean Matterson because manager Gervais Williams looks for companies combining the potential for both capital and income growth, and the trust's multi-cap approach means he has an exceptionally diverse investment universe. "He has demonstrated his ability to do well in difficult times, and the trust has a put option on the FTSE 100 index, which offers some protection if mar­kets fall," she says.

The Panel:

Gavin Haynes is managing director of Whitechurch Securities, which provides discretionary portfolio management to private clients. He has been managing fund portfolios since 1997.

Brian Dennehy is managing director of advisory firm Dennehy Weller. In 2012 he launched Fund-Expert, a fund platform for self-directed investors, which provides research for choosing funds.

Robert Burdett began managing funds at Rothschild and then Credit Suisse. In 2007 he joined Thames River to help set up its multi manager business, later taken over by F&C.

Mick Gilligan is a partner in private client stockbroker Killik & Co., where he is currently head of research. He analyses funds and trusts and manages the firm's multi-manager portfolio service.

John Husselbee is head of the Liontrust multi-asset team. He has 25 years of experience in managing multi-manager portfolios, including at Henderson and Rothschild.

John Newlands has overall responsibility for investment trust research at wealth manager Brewin Dolphin. He is supported by fund analysts who cover specific sectors, researching both open and closed ended funds.

Peter Hewitt has managed F&C Managed Portfolio trust since April 2008, having managed its forerunner, F&C Managed Portfolio Service, since 2002. He is a member of F&C's Global Equities team.

Tim Cockerill is investment director of Rowan Dartington, a Bristol-based wealth manager. Investment trusts have featured in its portfolios for many years. Rowan Dartington offers discretionary and advisory services.

Andrew McHattie runs the McHattie Group, an authorised firm that publishes specialist investment newsletters. He has been the editor of Investment Trust Newsletter since 1996.

Alan Borrows is a senior fund manager at Liverpool-based Seneca Investment Managers, which favours a value-oriented approach to multi-asset investment.

Jean Matterson is a partner and chief investment officer of Rossie House Investment Management, which she joined in 1996 after 20 years in the investment business with Stewart Ivory.

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.