Choosing the right investment funds for your pension or Stocks and Shares Isa can seem complicated, with so many to choose from. These three global stars can make things a lot simpler, by giving you a spread of top performing global companies in a single fund.
When investing, it makes sense to spread your money across companies worldwide, rather than sticking to the UK, said Laith Khalaf, head of investment analysis at wealth platform AJ Bell.
This helps diversify your Isa investments, and take advantage of fast-growing regions of the world, such as the US and emerging markets.
Khalaf said the UK stock market has underperformed for the last five years, hitting investors who have most of their money invested at home. “The FTSE won’t always underperform, but putting all your eggs in one basket means you are missing out on gains elsewhere.”
Khalaf picks out three global funds that will invest your money in a range of companies, from trillion-dollar US technology giants Amazon and Tesla, to lesser-known stocks across Europe, China, India and the UK.
Scottish Mortgage Investment Trust. This hugely popular fund from asset manager Baillie Gifford has been one of the best performers of the last decade, turning £10,000 into £100,000.
As ever, past performance is no guarantee of future returns, especially since star manager James Anderson is due to step down next April after more than two decades at the firm.
Yet Khalaf said Scottish Mortgage has an experienced team, and should continue to do well. “Baillie Gifford takes a high-octane approach, investing in a concentrated portfolio of companies it believe will be the market leaders of tomorrow. Long term performance has been simply exceptional.”
Top holdings include Amazon and Tesla, and Chinese tech giants Alibaba Group and Tencent Holdings. Roughly half the fund is invested in the US, and a third in China. Europe, Canada, Brazil, India and the UK also feature.
Scottish Mortgage has returned 359 percent in five years, with low ongoing charges of just 0.3 percent a year.
Liontrust Sustainable Future Global Growth. This global Isa fund lets you build your wealth for the future, without harming the planet.
As climate fears grow, investment funds that target companies based on positive environmental, social and governance (ESG) criteria are hugely popular.
There are now scores of “green” or “sustainable” funds to choose from, but Khalaf said Liontrust Sustainable Future Global Growth is one of the best.
“This ESG fund invests in global companies that are making the world healthier, cleaner or safer. Lead fund manager Peter Michaelis has been running sustainable funds since before Greta Thunberg was born.”
Top holdings include Google-owner Alphabet, Visa and PayPal. It is 60 percent invested in the US, with German, UK, Japanese and Swedish firms also represented.
The fund has returned 148 percent over five years, and has ongoing charges of 0.88 percent a year.
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Evenlode Global Income. This global fund aims to provide dividend income as well as capital growth, and currently yields 1.80 percent a year.
It has lower US exposure at just 40 percent, and is also heavily invested in Europe in the UK, with minimal exposure to China and Asia.
Laith said: “Evenlode Global Income seeks out companies with strong finances that offer predictable earnings growth and a growing dividend, to hold for the long term.”
Top holdings include Proctor & Gamble, Nestlé, Reckitt Benckiser and Unilever. The fund was only launched in 2017 but has grown 40 percent over the last three years. It has ongoing charges of 0.85 percent a year.
When investing in shares, even through globally diversified Isa funds like these, you should aim to hold them for a minimum of five years, and preferably much longer, to protect against short-term volatility.