First 50 Funds update: One third of Britain's best-performing funds are core funds
Nine of the UK’s 25 best-performing funds – and three of Moneywise’s top 50 First Funds for beginner investors – are “core funds”, according to new research from TD Direct Investing.
A core fund can be described as being “solid”. It will usually consist of a well-diversified collection of stable, proven companies that are likely to grow at a steady pace.
These funds are often used as foundation in portfolios. In contrast, individual shares, flutters on riskier investments, and other exotic trades generally act as ‘satellites’ around these so-called core funds.
But new research from TD Direct Investing highlights that of its top 25 funds, nine funds are core funds, and of these, three are also recommended in Moneywise’s 50 First Funds list.
The table below details these funds in full, and we’ve highlighted which are recommended as part of Moneywise’s First 50 Funds. Click on the fund names to see their factsheet.
To qualify as ‘best-performing’ in the first instance in TD Direct Investing’s eye, its key requirements are that the fund manager must have a 10-year track record running either the same fund or two funds managed consecutively in the same style, while the funds must outperform both their Investment Association sector peer group and their benchmark within this time.
A benchmark is the standard against which funds are typically measured. Different funds use different benchmarks, but common ones include the performance of the FTSE All-share, the S&P 500, or even the rate of inflation.
If a fund doesn’t beat its benchmark, then you may want to consider putting your money into a passive fund that tracks the benchmark instead of an actively managed fund that isn’t performing as well.
|Fund manager||Fund||Morningstar rating||Annualised return (%)||Sector outperformance (%)|
|Mark Slater||MFM Slater Growth||Bronze||12.2||7.1|
|Michael Lindsell & Nick Train||CF Lindsell Train UK Equity - Moneywise First 50 fund||Gold||11.5||6.3|
|Anthony Cross & Julian Fosh||Liontrust UK Smaller Companies||Bronze||11.7||4.4|
|Francis Brooke||Troy Trojan Income||Silver||9.3||4|
|Neil Woodford||CF Woodford Equity Income - Moneywise First 50 fund||Bronze*||9||3.8|
|John Wood||JOHCM UK Opportunities||Silver||8.6||3.7|
|Mark Barnett||IP UK Strategic Income||Bronze||8.6||3.7|
|Harry Nimmo||SLI UK Smaller Companies||Silver||10.9||3.6|
|Daniel Nickolls||Old Mutual UK Smaller Companies||Gold||10.5||3.2|
|James de Uphaugh & Chris Field||Majedie UK Equity||Bronze||8.4||3.2|
|Martin Cholwill||Royal London UK Equity Income||Silver||8.4||3|
|Mike Fox||Royal London Sustainable Leaders||Bronze||7.2||2|
|Matt Hudson||Schroder UK Alpha Income||Bronze||7.3||2|
|Audrey Ryan||Kames Ethical Equity||Silver||6.9||1.7|
|Nigel Thomas||AXA Framlington UK Select Opportunities - Moneywise First 50 fund||Gold||6.7||1.6|
|Adrian Frost & Adrian Gosden||Artemis Income||Gold*||6.6||1.3|
|Richard Buxton||Old Mutual UK Alpha||Silver||6.2||1|
|Alastair Mundy||Investec UK Special Situations||Gold||6.1||1|
|Jan Luthman & Stephen Bailey||Liontrust Macro Equity Income||Bronze||6.2||0.9|
|Derek Stuart||Artemis UK Special Situations||Gold||6||0.8|
|Carl Stick||Rathbone Income||Bronze||5.8||0.6|
|Stephen Adams||Kames UK Equity||Bronze||5.7||0.6|
|Lesley Duncan||SLI UK Ethical||Bronze||5.6||0.4|
|Mark Costar||JOHCM UK Growth||Silver||5.5||0.3|
|Richard Newbery & Alistair White||Aberforth UK Small Companies||Silver||7.4||0.1|
All investment returns are measured against a benchmark to represent “the market” and an investment that performs better than the benchmark is said to have outperformed the market. An active managed fund will seek to outperform a relevant index through superior selection of investments (unlike a tracker fund which can never outperform the market). Outperform is also an investment analyst’s recommendation, meaning that a specific share is expected to perform better than its peers in the market.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
An individual employed by an institution to manage an investment fund (unit trust, investment trust, pension fund or hedge fund) to meet pre-determined objectives (usually to generate capital growth or maximise income) in prescribed geographic areas or investment sectors (such as UK smaller companies, technology or commodities). The manager also carries the responsibility for general fund supervision, as well as monitoring the daily trading activity and also developing investment strategies to manage the risk profile of the fund.
A standard by which something is measured, usually the performance of investment funds against a specified index, such as the FTSE All-Share. Active fund managers look to outperform their benchmark index. Cautious fund managers aim to hold roughly the same proportion of each constituent as the benchmark, while a manager who deviates away from investing in the benchmark index’s constituents has a better chance of outperforming (or underperforming) the index.