More than 2.6 million women have been put off investing because of the baffling number of funds on offer, according to new research from Scottish Friendly. This may explain why there are nearly 200,000 more men with a stocks and shares ISA in the UK than women.
With over 3,000 funds available to investors, the process of choosing a handful to build a balanced ISA portfolio can certainly be daunting. But if you want to get a real return by investing in the stock market, you need to find a way through the maze.
The good news is that platforms have teams of researchers and analysts working hard to create short-lists to help investors narrow down the dizzying array of funds. They tend to feature funds that offer a good mix of performance potential and cost-efficiency.
Of course, these funds come with no guarantees on future performance. But they might be worth a look. All platforms name their lists differently. In January, Hargreaves Lansdown, the UK’s largest investment platform, launched a new recommended list of funds – the Wealth 50 which replaced the company’s previous Wealth 150 and Wealth 150+ lists.
At Interactive Investor it’s the Super 60, at Fidelity, The Select 50, AJ Bell has Favourite Funds and at Chelsea Financial Services it’s The Chelsea Selection. A recent study trawled through nine platform recommended fund lists — those listed above as well as Bestinvest, Charles Stanley Direct, The Share Centre and Close Brothers — to identify the funds with the most overlap.
The research, by Moneywise magazine, narrowed down nine funds that are listed on at least five of the nine major D2C platforms (click here to review D2C platforms). These are Stewart Investors Asia Pacific Leaders, FP CRUX European Special Situations, Liontrust Special Situations, Artemis Global Income, Baillie Gifford Japanese, Fundsmith Equity, Lindsell Train UK Equity, Newton Global Income and Franklin UK Smaller Companies.
Interestingly, none of the top funds are investment trusts because only a minority of platforms include investment trusts on their recommended lists, despite their potential for strong long-term returns.
Remember, fund lists do not constitute personal advice or a guide on how to invest. It’s important to choose investments based on your own objectives and attitude to risk. With a new tax allowance (£20,000) in sight in the new tax year, you might be considering the best home for your money.
So don’t be daunted and use the range of research options available to you to find the right place for your money to grow. If you already use an investment platform, now might be a good time to review your platform and whether it suits your needs. Our calculator will help you find the right one based on price as well as service and functionality.
But if you just can’t bring yourself to choose, pay a professional to do so on your behalf.