Jonathon Curtis 20 March 2019
As we approach the end of the tax year, we thought we'd take a look at some of the most popular funds with HL clients so far this year.
The funds are from a diverse range of sectors, including US, UK, global, emerging markets and bonds. Having a diversified portfolio could be more important than ever, especially with so much uncertainty around at the moment. From the threat of trade wars to slowing global growth. And not to mention the ‘B’ word.
Having a wide range of investments means you’re more likely to have something in your portfolio that's performing well at any one time. It might work well if all your investments are similar to each other during the good times, but the reverse is also true. That’s why we think it's good investors have thought about different types of funds.
Where did HL’s clients invest?
The list below shows the most popular funds (the most bought funds minus any sales) with HL’s investors so far in 2019.
It isn’t personal advice or a guide on how to invest. You should choose investments based on your own objectives and attitude to risk.
Investment values and income can fall as well as rise, so there’s no guarantee you’ll make a profit – you could get back less than you put in. If you’re not sure whether an investment is right for you, please ask us for advice.
Funds are listed in alphabetical order. Lindsell Train Global Equity and LF Lindsell Train UK Equity hold shares in Hargreaves Lansdown plc.
Let’s take a look at three funds from the list that also feature in the Wealth 50 list of our favourite funds.
The UK’s out of favour with investors. We think it's still a great place to invest for income though. There are plenty of companies that have proven resilient even during tough times and continue to pay attractive dividends to shareholders, although nothing is guaranteed.
Many still like traditional UK equity income funds, like Threadneedle UK Equity Income, managed by Richard Colwell.
He invests differently from lots of other fund managers. He looks for unloved and overlooked companies, which he thinks have bright futures ahead of them and could grow their dividends in future. He also invests in a core of companies that tend to pay steadier and more reliable dividends.
Colwell’s built a strong long-term track record investing this way. We expect he'll do well in future as well, although there are no guarantees. The fund currently yields 4.1% although that’s not an indication of future income.
The fund’s charges are taken from capital which increases yield but reduces the potential for capital growth.
Investing across the globe is a great way to diversify your portfolio. The US has been one of the strongest-performing stock markets for several years. So it's attracted a lot of attention from investors, who've continued to add exposure to their portfolio. This won't always be the case. But the US makes up around half the world’s stock market, so we think it makes sense to invest at least some of your portfolio there.
It’s also one of the most heavily researched, so it’s difficult to find opportunities other investors have missed. That's why many active fund managers struggle to consistently perform better than the broader US market.
Tracker funds are a convenient, low-cost way to invest in the US and we think Legal & General US Index is one of the best. It invests in nearly every company in the index and tries to copy the index performance rather than beat it. The fund’s kept costs low and has done a good job of closely matching the index for many years.
Investing in different asset classes is also a great way to diversify your portfolio. Bonds often perform differently to shares and they can also be a way to boost the income from your portfolio.
Eric Holt, manager of Royal London Sterling Extra Yield Bond, invests in corporate bonds that are often overlooked or not fully understood by other investors. That makes the fund different from lots of its competitors. Holt finds these bonds in a wide range of sectors. He invests in some more adventurous ones from financially riskier companies, as that’s where he normally finds the highest yields.
He’s supported by a talented team of bond investors and we expect them to deliver attractive levels of income over the long term. The fund currently yields 6.2%, although income is variable so that’s not guaranteed or an indication of future yields.
This is an offshore fund, so investors aren’t normally entitled to compensation through the Financial Services Compensation Scheme.
The funds invest in high yield bonds, which carry a greater risk of default than investment grade corporate bonds.
This article is not advice. If you are unsure of the suitability of an investment for your circumstances, please seek advice.