Bestinvest publishes 'The Best Funds’ list to help investors navigate the choice of over 4,000 funds04 October 2021
Bestinvest, the online service for investors who make their own investment choices, has this week published the latest list of its preferred funds – now badged ‘The Best Funds’ list – to help investors looking for ideas from amongst the thousands of options available.
The funds, investment companies and Exchange Traded Funds that appear in the list represent the top ideas from the sector specialists in the circa 300-strong Investment Management team at Bestinvest’s parent company, Tilney Smith & Williamson, which manages over £55 billion of assets for clients.
Unlike the ‘best buy’ lists compiled by some of Bestinvest’s competitors, The Best Funds List is not confined to open-ended funds such as OEICs and unit trusts. Among the 119 investments currently on the Best Funds List, there are 20 stock exchange listed investment trusts / investment companies and 19 Exchange Traded Funds.
Across these different types of investments, there are 17 which pursue responsible investment strategies that factor in environmental, social impact or ethical considerations. Thirty of the funds in the list take a passive approach to investing, tracking benchmark indices – such as the S&P 500 Index of large, US companies - or baskets of shares that meet criteria, rather than relying on the skills and judgement of a fund manager. These funds are included to provide options for those investors seeking a low-cost approach to investing.
When it comes to the selection of actively managed funds, where a manager or team seek to add value by picking the investments in a portfolio, the bar is very high. Just 89 actively managed funds and investment companies make the Best Funds List. This is a tiny proportion of the available universe of funds: there are around 4,000 funds on sale in the UK, as well as over 300 investment companies.
The Best Funds List sets out the qualities that its investment team look for when selecting actively managed funds, which Bestinvest coins its “10 commandments”. The criteria include managers who are not constrained by hugging benchmarks, have a clearly defined approach, who personally invest in their own funds and who are willing to limit the size of their funds if this starts to hamper the way it is managed. The list includes funds managed by large, well-known fund management groups, but also selections from small, boutique management groups who aren’t household names.
Jason Hollands, Managing Director at Bestinvest, commented: “Bestinvest have long-championed those investors who prefer to make their own decisions, rather than doing so after taking professional advice. For three decades we have highlighted the funds we think merit consideration, but also called out the ‘dogs’ that have delivered dismal returns and should probably be given a wide berth.
“The extensive choice of options available can be bewildering, with new funds being launched every month. It is very easy to fall into the trap of investing in whatever funds are currently being heavily marketed by large groups with big marketing budgets or relying on past performance alone. The trouble with this approach is that a fund’s past performance may have been achieved under a different manager from the one at the helm today, or succeeded under a very different set of circumstances, which may be less relevant in the years ahead.
“We have produced The Best Funds List to help self-directed investors navigate this maze. The list shares the top fund ideas that our Investment Management colleagues have identified in each sector, based on their research, including meeting the fund managers, digging beneath the bonnet to understand their investment approaches and giving important consideration to factors like fund size and liquidity.
”As the list evolves, with funds removed or new ones added, these are updated on the Bestinvest website, so that clients are kept up-to-date. Choosing fund is not just a case of doing some homework before buying them, once invested it is vital to constantly monitor your portfolio. A change in circumstances, such as the departure of a fund manager or a significant increase in the size of a fund, many require you to reassess whether it is right to stay invested or move to another fund instead.”
A copy of the list can be downloaded for free at https://www.bestinvest.co.uk/guides/the-best-funds-list
About Tilney Smith & Williamson
Tilney Smith & Williamson is the UK’s leading integrated wealth management and professional services group, created by the merger of Tilney and Smith & Williamson on 1 September 2020. With £54.8 billion of assets under management (as at 30 June 2021), it ranks as the third largest UK wealth manager measured by revenues and the eighth largest professional services firm ranked by fee income. The Group currently operates through three principal brands: Tilney, Smith & Williamson and online investment service Bestinvest. It has a network of 28 offices across the UK, as well as the Republic of Ireland and the Channel Islands. Through its operating companies, the Group offers an extensive range of financial and professional services to individuals, family trusts, professional intermediaries, charities and businesses. It is uniquely well-placed to support clients with both their personal financial affairs and their business interests. Tilney Smith & Williamson’s personal wealth management services include financial planning, investment management and advice, online execution-only investing and personal tax advice. For businesses, its wide range of services includes assurance and accounting, business tax advice, employee benefits, forensic advice, fund administration, recovery and restructuring and transaction services.