Heading into the autumn budget, investors may be looking to adjust their portfolios to take full advantage of tax-efficient products, but with so many choices, this can feel like a daunting task. It may happen.
There is speculation that Chancellor Rachel Reeves’ autumn budget, to be announced on October 30th, will include a number of proposals, including an increase in capital gains tax on profits from the sale of assets.
As such, DIY investors may be considering putting their extra cash into a tax-efficient Individual Savings Account (ISA) or Self-Invested Personal Pension (SIPP) to protect their funds from any volatility.
But with more than 4,000 funds for sale categorized into sectors under the Investment Association (IA) industry body, narrowing down the right funds to add to your portfolio can feel difficult.
Investment platform Bestinvest has compiled an updated list of 137 funds preferred by its research team.
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Of this list, 103 funds are actively managed funds and mutual funds that aim to generate market-beating returns, and 34 funds are passive funds.
Criteria for determining which funds made the list also included funds run by managers who invest their own money in the funds, as well as funds with “very clear” objectives. Another factor is that fund managers focus more on the fundamentals of the businesses they invest in than on short-term stock prices or manager longevity.
Jason Hollands, managing director at BestInvest, said: โIf anyone is rushing to load their ISAs and SIPPs in time to meet budget tax changes, the October 30th deadline will be a great time to move into the tax wrapper. Please remember that this only applies to contributions.”
This means investors can “take their time and make investment choices,” he added.
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Bestinvest’s latest Best Funds list, published twice a year, includes:
Liontrust European Dynamic (0P00006TQM.L) has invested in European companies such as Danish jewelery brand Pandora (PNDORA.CO) and Zara owner Inditex (ITX.MC).
The one-year return of 13% was below the 15% rise in the benchmark MSCI Europe ex-UK index, but the three-year return of 29% was higher than the benchmark’s 16% rise.
M&G Japan (0P0000WN42.L) owns Japanese companies such as major companies Mitsubishi Corporation (8058.T) and Sony (6758.T).
The fund achieved a one-year return of 10%, compared with an 11% rise in the MSCI Japan index, but an 8% return over three years, compared with a 3% rise in the benchmark.
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BlackRock Gold & General (0P0000KANP.L) invests in gold miners. Investments include Canada’s Barrick Gold (GOLD) and US mining giant Newmont Corporation (NEM). Over the course of one year, the fund generated a total return of 38%. In comparison, the FTSE Gold Mining Index benchmark rose 41%.
Amid rising geopolitical tensions and concerns about the global economy, gold prices have soared recently, with spot prices at $2,649 an ounce on Thursday afternoon.
Funds that are no longer on the best fund list
Janus Henderson Strategic Bonds (0P00008F8P.L) holds bonds from the United Kingdom, the United States, and other countries, also known as British and American bonds. The fund has a yield of 3.7%, but has returned 8% over the past year, slightly below the 11% average for its peers in the IA Strategic Bond sector.
CT Responsible Global Equity (0P0001BHCZ.L) was also not selected this time. The fund aims to invest in companies that provide sustainable solutions or make a positive contribution to society. Tech giants Apple (AAPL) and Microsoft (MSFT) are among the company’s major investments.
Despite this year’s rise in tech stocks, the fund failed to outperform its comparative benchmark, the MSCI World Index, last year. Over the year, the return was 18%, while the index was up 21%.
UK-specific funds
Artemis UK Select (0P0000V25A.L) is one of the funds that made it to our list of best funds in the UK equities growth space.
The fund aims to grow investors’ money over five years by investing in a portfolio of small, medium and large UK companies. Portfolio stocks include banks Barclays (BARC.L), NatWest (NWG.L) and housebuilder Vistry Group (VTY.L).
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Artemis UK Select has returned 27% over the past year, outperforming the FTSE All Share Tracker Index’s return of 17%.
BestInvest said in its report that fund manager Ed Leggett “looks beneath the surface of a company’s financial statements to establish a forward-looking view of a company’s health and future potential.”
Fund focused on North America
In the group of North American-focused funds, US Premier Mitten Opportunities (0P0000XOCD.L) also remained on the list.
The fund invests in U.S. companies of all sectors and sizes, with major holdings including card operator Visa (V) and investment bank Raymond James Financial (RJF).
The fund underperformed its sector last year, returning nearly 11% compared to the average return of 19% for the IA North America sector. However, the stock has returned 328% since its launch in 2013, beating the sector average of 309%.
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“We like this fund for its multi-cap approach and sector and industry diversity in the world’s largest economy,” BestInvest said.
ethical and sustainable funds
For investors looking for an ethical and sustainable fund, Baillie Gifford Responsible Global Equity Income (0P0001J8P1.L) is one of the funds featured by BestInvest.
Investments include diabetes drug specialist Novo Nordisk (NOVO-B.CO), tech giant Microsoft (MSFT) and heating and air conditioning group Watsuco (WSO).
The fund has returned 12% last year, but has been unable to sustain the MSCI ACWI benchmark index, which is up nearly 20%. However, the fund’s yield of 2% showed it to be an “attractive option for income-seeking investors”, BestInvest said.
“This fund can be a natural addition to a responsible portfolio, and its fees are among the lowest in the industry,” BestInvest said, with ongoing fees of 0.54%.
Click this link to read a complete overview of which funds made it to Bestinvest’s latest ‘Best Funds List’.
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