Moneywise's First 50 Funds for beginners

The Moneywise Team
7 May 2019

Choosing from thousands of funds can be daunting for novice investors

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 To make it easier, Moneywise has updated its 50 top funds for beginners with seven new funds for 2019. Whether you prefer active or passive funds, we’ll have an option to suit you

Moneywise’s list of 50 funds, which we launched in July 2016 and update every year, includes index tracker funds, actively managed funds and investment trusts.

The selection offers a good starting point for beginner investors looking to put together a balanced portfolio.

Index tracker funds are low cost and can be used to build a solid core for your portfolio. They are also known as passive funds because they simply aim to replicate the performance of a benchmark index, rather than trying to actively buy and sell stocks and shares to boost performance. If you use trackers, you’ll never beat the index – but you also reduce the risk of performing worse than the index.

Active funds have the potential to perform better than index trackers, but there is the risk that the fund manager may make the wrong decision.

Many of these active funds have income and accumulation units, and you will need to buy the right version for your investment needs.

With income units, shown as ‘Inc’ in the fund name, any income is paid as cash. This can be withdrawn, reinvested or simply held in your account. With accumulation units, shown as ‘Acc’ in the fund name, any income is retained within the fund; the number of units remains the same, but the price of each unit increases by the amount of income generated within the fund. Generally, accumulation units offer a slightly more efficient way to reinvest income, although many investors will choose to hold income units and reinvest the income to buy extra units.

Many investors build a core of low-cost passive funds and then add active funds as ‘satellites’ around this to try to add value.

We have included the ISIN identifier for each fund below – this is a unique number that will help you identify the fund on the investment platform you use.

The ongoing charges figure, or OCF, is the most accurate measure available of what it costs to invest in a fund. The OCF is made up of the annual management charge (AMC) levied by fund managers and other operating costs.

Note that you may have to pay an investment platform fee on top of this, depending on which platform you use to buy the funds.

How we reviewed and updated the list

Our main considerations are a fund’s performance, charges and suitability for a beginner investor. We considered whether funds had been highly commended or won a Moneywise fund or investment trust award over the past year.

We also considered our sister magazine Money Observer’s Rated Funds list for 2019, which includes 267 active and passive funds.

Plus, we reviewed rated funds lists on platforms such as Moneywise’s parent company, interactive investor, and other DIY investment platforms. We also consulted ii’s investment analyst, Dzmitry Lipski.

Why we dropped these six funds from the First 50 list

HSBC FTSE 250 Index C Acc
Does the same job as the Vanguard FTSE 250 ETF but costs 0.08 percentage points more.

TB Evenlode Income B Acc
This fund is ‘soft-closed’ to new investors. Franklin UK Rising Dividends is a good alternative with a lower OCF.

Fidelity Emerging Markets W Acc
Swapped for Baillie Gifford Emerging Markets, as the First 50 already includes Fidelity Index Emerging Markets. The Baillie Gifford fund is also cheaper and better performing over three years, and is a Moneywise Fund Award winner 2018, although its risk profile is higher.

Fidelity Moneybuilder Income Y Acc
This fund recently lost its manager of 25 years and has returned less than its replacement in the Money Observer Rated Funds list for 2019, BlackRock Corporate Bond.

TwentyFour Dynamic Bond I Gr Acc
Its replacement Royal London Global Bond Opportunities is cheaper and offers a high yield.

Kames Property Income B Gr Acc
This fund has been dropped for Fidelity Global Property as we believe global property exposure is likely to be a less risky proposition for UK investors in the current climate. It has also performed better over three years.

First 50 Funds - the selection for 2019

For ease of use, we have divided the First 50 Funds selection into three parts:

20 cheap tracker funds to use as core holdings 
The best ‘fire and forget’ funds. Use these if you want no-nonsense, cheap investing.

20 active funds to add value 
If you want a manager to sit down and pick the shares and bonds that they think will perform best, make sure you look at these.

10 investment trusts for starters  
Investment trusts possess unique qualities that make them worth considering by anyone investing over the longer term, but they can be riskier than funds.

Create portfolios from the First 50 Funds

We also show how you can start investing for income or growth by combining the funds in the selection. 

Turn First 50 into a potent portfolio 
Moira O'Neill shows you how to build an income or growth portfolio using the funds covered above.

Easy tracker fund portfolios for 2019 and beyond 
We explain how beginner investors can use the tracker funds in Moneywise’s First 50 Funds to construct simple, low-maintenance investment portfolios.

First published on 27 June 2016