Investing in mutual funds can be a great way to get exposure to the stock market if you’re new to investing and hesitant to select individual stocks yourself.
With a mutual fund, your money is pooled together with the money of thousands of other investors and managed by a professional fund manager, freeing you to spend your time as you desire.
Below, I’ve listed two top funds that could be worth a look if you’ve found that you have a little spare cash this month.
UK stock market exposure
For investors with a mid-level risk tolerance, the Threadneedle UK Equity Income fund could definitely be worth considering. This fund is part of Hargreaves Lansdown’s ‘Wealth 150+’ group meaning that the broker believes that it offers a top combination of first-class performance, along with low management charges. Funds must pass a rigorous selection process to make it into the Wealth 150+ club.
The aim of this fund is to achieve capital growth, along with an ‘above-average’ rate of income by investing mainly in UK stocks. It does, however, have the flexibility to invest in other securities such as bonds. Portfolio manager Richard Colwell generally invests in around 45-60 different stocks, with the core of the portfolio invested in large, high-quality companies that pay dividends. Currently, the top holdings include healthcare giants AstraZeneca and GlaxoSmithKline, tobacco manufacturer Imperial Brands, oil major Royal Dutch Shell and consumer goods champion Unilever.
Over one, three and five years, the fund has been a consistent performer, returning 7%, 31% and 57%, which are solid figures. Fees are very reasonable at 0.68% per year through Hargreaves Lansdown.
Technology exposure
If you’re comfortable taking on more risk with your investments, have a look at the Polar Capital Technology Fund, which invests in a globally diversified portfolio of technology companies.
Having a small proportion of your portfolio allocated to the technology sector is a smart move, in my opinion. Over the past decade, advances in technology have transformed our world, yet I think this could be just the beginning. From self-driving cars to robots that can perform surgery and prepare meals, technology is likely to have a significant impact on our lives in the years ahead.
This fund looks to be an excellent way to profit from the technology boom. With sizeable exposure to some of the world’s leading tech companies, including Microsoft, Google and Apple, as well as exposure to smaller companies that specialise in niche areas such as artificial intelligence, robotics and the internet of things (IoT), the fund is well placed to benefit from continued advances in technology.
While past performance is no guarantee of future performance, in recent years, the Polar Capital Technology fund has been a top performer, returning an incredible 29%, 135% and 209% over one, three and five years respectively. Investors should note, however, that as a fund investing purely in technology companies, it is riskier than a fund that invests across a broad range of sectors, so sensible risk management practices (diversification) are advised. Fees through Hargreaves Lansdown are 1.15% per year.
