We asked our contract writers if they’d be willing to share the one fund that makes up the largest position in their Stocks and Shares ISA portfolio today.
Without further ado, here is a selection of their top long-term buy-and-hold investment funds!
Artemis High Income Fund
What it does: Artemis High Income Fund invests mostly in non-investment-grade bonds that pay higher coupons.
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By Royston Wild. I opened a position in Artemis High Income Fund earlier this year to help me de-risk my Stocks and Shares ISA.
It’s a group investment that uses the lion’s share of its cash to buy government and corporate bonds. Only a maximum of 20% of the money it holds can be ploughed into equities.
This particular fund exposes investors to a higher level of risk than many other bond-focused investments. This is because it predominantly invests in loans that are at the lower end of the credit quality spectrum. At the time of writing, less than 30% of the bonds it held were considered investment grade (i.e. BBB and higher).
The flipside of this is that such bonds naturally pay a bigger yield than ones of better quality. And Artemis High Income has a terrific track record of making this work for its investors. Since it was launched in 2002, the fund has delivered a return of 220%.
Royston Wild has a position in Artemis High Income Fund.
Fundsmith Equity
What it does: Fundsmith is a global equity fund that is managed by Terry Smith.
By Edward Sheldon, CFA. My largest fund holding is currently Fundsmith Equity. Why this fund? There are a number of reasons.
One is that it has a global focus. This means that it gives me exposure to world-class businesses listed overseas (like Danish diabetes specialist Novo Nordisk).
Another is that there’s a focus on high-quality businesses that are very profitable. This focus on quality tends to provide upside when the stock market is rising while also providing an element of protection when stocks are falling.
A third reason is that the fund has a brilliant long-term performance track record. Since its inception in late 2010, it has returned around 16% per year on average, beating the broader market by a wide margin.
Of course, past performance is not an indicator of future returns. And there are going to be times when this fund underperforms the market (it underperformed last year).
Overall, though, I see it as a great core holding.
Edward Sheldon has a position in Fundsmith Equity
Scottish Mortgage Investment Trust
What it does: Scottish Mortgage Investment Trust aims to identify and own exceptional growth companies from around the world.
By Paul Summers. Thanks to rapidly rising interest rates, growth fund Scottish Mortgage (LSE: SMT) was one of the worst performers in the FTSE 100 last year.
As frustrating as this has been, I’ve been using the (big) dip in sentiment to accumulate more shares. Indeed, Scottish Mortgage has quickly become my largest ISA holding.
Obviously, this doesn’t mean things won’t get worse before they get better. Inflation is proving a stubborn beast to tame.
But confirmation that major banks will pause rate hikes could yield a reversal in sentiment. And when the next bull market does arrive, I want to be invested in those companies that will shape the future of the global economy.
This strategy isn’t currently popular, but it’s what has led to Scottish Mortgage massively outperforming the market over the very long term.
And it’s this that really matters to a patient Fool like myself.
Paul Summers has a position in Scottish Mortgage Investment Trust
Vanguard FTSE Global All Cap Index Fund
What it does: This fund offers exposure to over 7,000 global stocks, comprised of large, mid-cap, and small company shares.
By Charlie Carman. Few products offer the diversification of the Vanguard FTSE Global All Cap Index Fund. Investors benefit from truly worldwide equity exposure. Currently, 62% of the fund is concentrated in North America, 17% in Europe, 11% in the Pacific, and 10% in emerging markets.
Reflecting their enormous market capitalisations, Apple, Microsoft, Amazon, Alphabet, and NVIDIA are the five largest positions. As the fund only invests in stocks, Vanguard gives it a risk rating of 5 out of 7.
The fund’s breadth is the primary reason it’s my core ISA holding. I treat this as a ‘set-and-forget’ investment as I plan to hold my position for decades to come.
One downside is it won’t beat the market, due to its very diversified nature. That’s why I also invest in individual shares with a view to boosting my returns by taking larger stakes in companies that I believe can outperform this passive fund.
Charlie Carman has a position in the Vanguard FTSE Global All Cap Index Fund.
