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 This can be withdrawn, reinvested or simply held in your account.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

 

Regular updates

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

More About