Moneywise First 50 Funds - 20 active funds to add value

14 July 2016
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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. See our 50 first funds for beginners homepage for links to the other 30 funds in the list.

UK STOCK MARKET INCOME

Franklin UK Rising Dividends W Acc
This fund aims to beat the FTSE All-Share index over the long term by investing in businesses that can consistently grow their dividends. The fund has a concentrated portfolio, typically of 40 to 50 names and focuses on firms that have increased their dividends in at least eight of the past 10 years and have not cut their dividends over that period.
OCF: 0.55%
ISIN – Inc: GB00BT6STC53
Acc: GB00B5MJ5601

MI Chelverton UK Equity Income B Inc or Acc
By investing in predominantly medium-sized companies, it aims to deliver a high and growing quarterly dividend and the prospect of good long-term capital growth. It has been a standout performer over the long term, but can be more volatile than other equity income funds.
OCF: 0.86%
ISIN – GB00B1FD6467
Acc: GB00B1Y9J570

UK STOCK MARKET GROWTH

Merian UK Mid Cap R Inc or Acc
Formerly called Old Mutual, its aim is to provide capital growth by investing primarily in a portfolio of medium-sized UK companies.
OCF: 0.85%
ISIN – Inc: GB00B8FC6L92
Acc: GB00B1XG9482

Marlborough UK Micro-Cap Growth Fund P Acc
Managed by Giles Hargreave and Guy Feld, it aims to provide a total return of capital and income in excess of that achieved by the FTSE Small Cap Index (excluding investment companies) over the medium to long term. Inc class is not available.
OCF: 0.79%
ISIN – Acc: GB00B8F8YX59

Liontrust Special Situations I Inc
An attractive offering for investors seeking an unconstrained UK equity fund, this fund has a distinct process looking for UK companies with a strong defendable business franchise. It invests in all sizes of companies in a relatively concentrated portfolio with low turnover. Acc class is not available.
OCF: 0.87%
ISIN – GB00B57H4F11

GLOBAL STOCK MARKET

Fundsmith Equity I Inc or Acc
Managed by Terry Smith, it invests in equities on a global basis for the long term. It will not adopt short-term trading strategies.
OCF: 0.95%
ISIN – Inc: GB00B4MR8G82
Acc: GB00B41YBW71

Lindsell Train Global Equity B Inc
Managers Nick Train, Michael Lindsell and James Bullock want to achieve long-term income and capital growth by constructing a concentrated portfolio of 20 to 35 ‘exceptional’ companies from around the world. Acc class is not available.
OCF: 0.72%
ISIN – B Inc: IE00B3NS4D25

Artemis Global Income I Inc or Acc
The fund is better diversified than some global equity income funds, using its full global remit to exploit income opportunities and keeping its UK content relatively low.
OCF: 0.82%
ISIN – Inc: GB00B5N99561
Acc: GB00B5ZX1M70

SPECIALIST OVERSEAS SHARES

Fidelity American Special Situations W Acc
This fund’s manager Angel Agudo has a contrarian approach to investing, targeting companies suffering from specific problems that he believes will be resolved. It has been trialling a new fee structure since April 2018 – a lower base fee and a new performance fee linked to success in beating the market. Inc class is not available
OCF: 0.92%
ISIN – Acc: GB00B89ST706

Man GLG Continental European Growth C Professional Acc
This fund aims to achieve above average long-term capital growth through investing in shares of companies listed on European Stock Exchanges. The manager invests in companies that enjoy a firm leadership position that gives them excellent prospects, plus companies that are emerging winners already enjoying clear competitive advantages. Inc class is not available.
OCF: 0.9%
ISIN - Acc: GB00B0119487

Baillie Gifford Japanese Inc or Acc
Japan is a major developed market, and this is a sound choice for getting core Japanese equity exposure into your portfolio. The fund seeks to identify typically 50 to 60 companies with potential to grow over the long term. It is managed by a very experienced Japanese equities team and has a low ongoing charge, compared to rival funds.
OCF: 0.63%
ISIN - Inc: GB0006010945
Acc: GB0006011133

Stewart Investors Asia Pacific Leaders B Inc or Acc
Its goal is to achieve long-term capital growth from a portfolio of large and medium-sized companies in the Asia Pacific region (excluding Japan, but including Australasia).
OCF: 0.88%
ISIN – Inc: GB00B57S0V20
Acc: GB0033874768

Baillie Gifford Emerging Markets Growth B Inc or Acc
This fund’s objective is to produce attractive returns over the long term through investment in emerging markets worldwide. China is the largest weighting at almost 30% followed by India, South Korea and Brazil. It was a winner in the Moneywise Fund Awards 2018.
OCF: 0.78%
ISIN – Inc: GB0006020530
Acc: GB0006020647

BONDS

BlackRock Corporate Bond D Inc or Acc
A fund that invests in a wide spectrum of fixed-interest securities, mainly investment-grade corporate bonds, which must account for at least 80% of the portfolio. It aims to maximise returns through both capital growth and income.
OCF: 0.57%
ISIN – Inc: GB00B4T5JV79
Acc: GB00B4QC3311

Jupiter Strategic Bond I Inc or Acc
A flexible ‘go-anywhere’ bond fund that aims for a high income and capital growth by seeking out the best fixed-income opportunities around the world.
OCF: 0.73%
ISIN – Inc: GB00B544HM32
Acc: GB00B4T6SD53

Royal London Global Bond Opportunities Z Inc or Acc
This well-diversified fund offers a high level of income as well as the opportunity for capital growth. It focuses predominantly on credit markets internationally.
OCF: 0.5%
ISIN – Inc: IE00BYTYX230
Acc: IE00BD0NHJ71

Marlborough Global Bond P Inc or Acc
A very diversified portfolio of bonds from around the world, including the UK. A good way to diversify bond exposure. It has almost 50 holdings – more than most comparable funds.
OCF: 0.44%
ISIN – Inc: GB00B8H7D001
Acc: GB00B6ZDFJ91

ETHICAL AND SOCIALLY RESPONSIBLE INVESTMENT

Royal London Sustainable World Trust C Inc or Acc
The core aim of this fund is to invest in innovative companies having a positive impact on society. It also invests in companies showing leadership in environmental, social and governance (ESG) management. There tends to be a bias towards the US and developed markets because that is where the manager tends to find innovation and companies with the strongest ESG standards.
OCF: 0.77%
ISIN – Inc: GB00B8GG6326
Acc: GB00B882H241

Rathbone Ethical Bond
It has a higher income target than other bond funds and has a very good performance record. The fund excludes investments in companies that are involved with: mining, arms, gambling, pornography, animal testing, nuclear power, alcohol or tobacco. All its investments must have at least one positive environmental, social or corporate governance quality.
OCF: 0.67%
ISIN – Inc: GB00B7FQJT36
Acc: GB00B77DQT14

PROPERTY

Fidelity Global Property W
This fund invests in the shares of property companies globally rather than directly in bricks and mortar. It has a concentrated portfolio of 30 to 40 shares and focuses on larger companies with good dividend yields. The fund’s largest country weighting at the end of 2018 was to the US at more than 50%, followed by Hong Kong and Germany.
OCF: 0.95%
ISIN – Inc: GB00BJ629381
Acc: GB00B7K2NZ09

HOW TO TURN THE FIRST 50 FUNDS INTO A POTENT PORTFOLIO

When putting together a portfolio of funds, the easiest way to think about combining these is through the ‘core and satellite’ approach. This separates a portfolio of investments into two distinct segments: the first is a core of long-term, low-cost and highly diversified investments, while the other is a selection of more specialist satellite investments.

Moneywise has put together some simple portfolios, that will help you begin investing for income or for growth. You can view them here