Moneywise's First 50 Funds for beginners

Published by Moira O'Neill on 27 June 2016.
Last updated on 30 August 2017

First 50

When you start investing, choosing from thousands of funds can seem daunting. To make your choice easier, Moneywise editor Moira O’Neill has updated her 50 favourite funds for beginners with seven new funds. Whether you’re looking for passive or active funds, she has options to suit you.

Moneywise’s list of 50 funds, which we first launched in the July 2016 magazine, includes index tracker funds and actively managed funds.

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

Many of these 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 This can be withdrawn, reinvested or simply held in your account.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.

We have included the ISIN identifier for each fund – 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. You can read Moneywise’s platform recommendations here.

How I reviewed and updated the list

I took into account whether funds had been highly commended or won a Moneywise fund or investment trust award over the past year. I also considered our sister magazine Money Observer’s Rated Funds list for 2017. Other considerations included performance and charges and suitability for a beginner investor. Plus, I consulted investment experts Peter Sleep and Damian Barry at Seven Investment Management (7IM), and Jason Hollands, managing director, business development and communications, at Tilney Investment Management Services.

Why we dropped these funds

AXA Framlington UK Select Opportunities

It has underperformed the FTSE All Share index. It’s too UK-centric and we already have two UK equity fund options in the list.

BlackRock Corporate Bond Tracker

Again, it’s too UK-centric and we already have two UK coporate bond funds options in the list. 

F&C Managed Portfolio Income (FMPI)

Generating income from company shares globally by investing in a diversified portfolio of investment trusts and investment companies, it offers a good way to test the water in this sector.‑However, we wanted to include another property investment trust because we believe investment trusts are the best vehicles to invest for the long term in property.

Fidelity Index UK Fund

It has not tracked the performance of its benchmark index as well as the L&G fund we replaced it with.

Kames Absolute Return Bond Fund

It has posted small positive returns for investors but has not been meeting its return targets.

Marlborough Multi Cap Income

Our experts said it is really heavily biased to smaller companies rather than a truly multi-cap income fund.

M&G Property Portfolio

This fund had a bad time in 2016 after the Brexit vote when investors piled out of commercial property and didn’t recover so well as the Henderson Fund.

First 50 Funds - the selection for 2017

For ease of use, we have divided the 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 stocks and bonds best alligned with your goals and boundaries, make sure to take a 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 2017 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.

Regular updates

We run regular updates on the funds in our selection, which we'll post below. 

First 50 Funds Interview: Anthony Cross, Liontrust Special Situations
Moneywise’s Helen Knapman meets fund manager Anthony Cross to get the lowdown on Liontrust Special Situations, a member of the Moneywise First 50 Funds.

First 50 Funds Interview: Hugh Yarrow of Evenlode Income 
Hugh Yarrow, manager of Evenlode Income, gives Moneywise’s Helen Knapman the lowdown on his fund, which is a recent addition to Moneywise’s First 50 Funds for novice investors.

First 50 Funds Interview: Rory Powe of Man GLG Continental European Growth 
Moneywise’s Helen Knapman meets Rory Powe, fund manager of a new addition to the Moneywise First 50 Funds list, the Man GLG Continental European Growth fund.

First 50 Funds: Marlborough UK Micro-Cap Growth 
Moneywise’s Helen Knapman gets the lowdown on investing in small companies from Giles Hargreave and Guy Feld, co-managers of First 50 fund, Marlborough UK Micro-Cap Growth.

First 50 Funds: AXA Framlington UK Select Opps adds to companies that can benefit from Trump stimulus 
Nigel Thomas, fund manager of AXA Framlington UK Select Opportunities, says that he’s not worried about 1970s-style high inflation but is preparing for the impact of changes in consumer preferences.

Interview: Rebecca McVittie of Fidelity Emerging Markets 
Helen Knapman finds out why investors should consider emerging markets.

Colin Finlayson, manager of the Kames Absolute Return Bond Fund 
Helen Knapman finds out why investors should still consider this ‘safe haven’ asset.

Bruce Stout, manager of Murray International Trust 
Bruce Stout, manager of Murray International Trust gives Moneywise’s Helen Knapman the lowdown.

Interview: Ainslie McLennan, manager of Henderson UK Property Fund 
Helen Knapman got the lowdown on this property fund.

Moneywise First 50 Funds: Trackers beat actives in 2016 
The tracker funds selected for Moneywise’s First 50 Funds list for beginner investors beat the performance of the active funds on the same list during 2016.

Interview: Job Curtis, manager of City of London Investment Trust  
Helen Knapman went to meet Job Curtis, the manager of City of London Investment Trust.

Interview: Jacob de Tusch-Lec, manager of Artemis Global Income 
Moneywise’s Helen Knapman meets Jacob de Tusch-Lec, fund manager of Artemis Global Income. 

Interview: Nick Blake, head of marketing and policy for Vanguard’s European business 
Helen Knapman talks about Vanguard and its funds.

Interview: Jeff Atherton and Adrian Edwards of Man GLG Japan CoreAlpha -
Helen Knapman meets Jeff Atherton and Adrian Edwards to uncover more about Man GLG Japan CoreAlpha – a fund that invests in large Japanese companies

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.

Interview: Neil Hermon, manager of Henderson Smaller Companies Investment Trust -
Moneywise’s Helen Knapman delves into the details of the Henderson Smaller Companies Investment Trust – one of our First 50 Funds for beginners – and meets its manager, Neil Hermon.

First 50 Funds update: M&G Property fund re-opens for business -
The M&G Property Portfolio, which is one of Moneywise’s First 50 Funds for beginners has become the latest commercial property fund to reopen its doors. Trading will resume at noon on Friday 4 November.

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