The top 50 funds to invest in now
Given the prolonged period of ultra-low interest rates, more Britons than ever before are piling into the stockmarket. According to trade body, the Investment Association, collectively we now have £899 billion invested in funds - pooled investment schemes sometimes referred to as unit trusts or OEICs.
But investing can be a tricky business, given the plethora of products on offer. In addition, investing is also a long-term business and there will be ups and downs, so patience is key. While there is no shortage of funds to choose from, finding fund managers who can deliver consistently is another matter.
Rob Gleeson, head of FE Research, a fund analyst, explains: "Generally, the most consistent managers are the ones with a strong core strategy. While they will have ups and downs across the business cycle, over multiple cycles they offer relatively stable returns."
To give you an idea of where you might want to squirrel away some cash, we've picked out 50 fund choices, as recommended by some of the UK's top fund-pickers. Our panel includes: Darius McDermott, managing director of brokers Chelsea Financial Services; Mark Dampier, head of research at Hargreaves Lansdown; Gavin Haynes, managing director of Whitechurch Securities; and Adrian Lowcock, head of investing at Axa Wealth.
The general term for the rate of income from an investment expressed as an annual percentage and based on its current market value. For example, if a corporate bond or gilt originally sold at £100 par value with a coupon of 10% is bought for £100 then the coupon and the yield are the same at 10%, or £10. But if an investor buys the bond for £125, its coupon is still 10% (or £10) and the investor receives £10 but as the investor bought the bond for £125 (not £100) the yield on the investment is 8%.
Open-ended investment companies are hybrid investment funds that have some of the features of an investment trust and some of a unit trust. Like an investment trust, an Oeic issues shares but, unlike an investment trust which has a fixed number of shares in issue, like a unit trust, the fund manager of an Oeic can create and redeem (buy back and cancel) shares subject to demand, so new shares are created for investors who want to buy and the Oeic buys back shares from investors who want to sell. Also, Oeic pricing is easier to understand than unit trusts as Oeics only have one price to buy or sell (unit trusts have one price to buy the unit and another lower price when selling it back to the fund).
The familiar name given to securities issued by the British government and issued to raise money to bridge the gap between what the government spends and what it earns in tax revenue. Back in 1997, the entire stock of outstanding gilts was £275bn; by October 2010 it had surpassed £1,000bn. Gilts are issued throughout the year by the Debt Management Office and are essentially investment bonds backed by HM Treasury & Customs and considered a very safe investment because the British government has never defaulted on its debts and this security is reflected in the UK’s AAA-rating for its debt. Gilts work in a similar way to bonds and are another variant on fixed-income securities.