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Investing in funds – 3 exciting investment ideas

We look at the benefits of investing in funds, how investors could think about adding them to their investment portfolio, and share three exciting investment ideas.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Investing can be exciting, but at the very same time pretty daunting. After all, it can be tricky to know how and where to invest to give your money the best chance to grow.

However, investing can also be easy, depending on how you approach it.

Let’s start with the basics.

What are funds and how could they help me?

A fund is an investment that pools lots of investors’ money together.

The money’s then invested and actively managed by a professional fund manager – unless they’re tracking an index. They’ll use their expert knowledge and research to pick what they think are the best investments for the fund.

Leaving it to the experts can make your investing life a lot easier.

You can also invest in index tracker funds, which are often cheaper. They’re designed to track the performance of a particular stock market or index, like the FTSE 100 or S&P 500.

Now I know what a fund is, how should I approach investing?

We think one of the best ways to think about investing is through a ‘core-satellite’ approach.

A core-satellite approach involves holding a main core of investments, surrounded by smaller satellites.

The main core will make up most of your investments. You can then plug in other investments as the satellites. They’ll take up a smaller proportion but are just as important.

There's no rule which says that you have to have a balanced, diversified portfolio. However, different areas, investing styles, and types of investments can perform differently at different times. If you choose funds that all invest in the same way, you'll probably only be right some of the time.

Holding a well thought out portfolio that includes lots of different types of investments reduces the impact of any one area performing poorly. It means you’re diversified.

Unlike the security offered by cash, all investments can go up and down in value, so you could get back less than you put in.

Ideas for your core-satellite investment portfolio

Investing in these funds isn’t right for everyone. Investors should only invest if the fund’s objectives are aligned with their own and there’s a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest and make sure any new investment forms part of a diversified portfolio. You should only invest for the long term, usually five years or more.

This isn’t personal advice. If you’re not sure if an investment is right for you, you should get advice.

Let’s start with an idea for the core.

Troy Trojan

We think Troy Trojan could be a good long-term option as part of the core of a portfolio. By investing in a wide range of investments, it’s a strong building block around which a portfolio could be built. It has a more concentrated portfolio meaning each holding can have a big impact on performance, but it is a higher-risk approach. It can also invest in smaller companies, which are higher risk than their larger counterparts.

Find out more about this fund including charges

Key Investor Information

What about some satellite ideas?

JPM Emerging Markets

This fund can add a bit of adventure to a portfolio. Emerging markets offer lots of opportunity for investors, but they're higher risk and typically more volatile than developed markets. This makes the fund a more adventurous way to try to grow wealth over the long term.

Find out more about this fund including charges

Key Investor Information

Legal & General Future World ESG Developed Index

This fund focuses on developed markets and also invests more responsibly. It lets you invest around the world in a single investment. We think it could be another good option for a satellite fund. The fund can use derivatives which increases risk.

Find out more about this fund including charges

Key Investor Information

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    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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