I wouldn’t ignore the FTSE 250 if I were to begin investing today. After all, this index features many high-quality businesses. Thanks to their potential to grow revenue and profit at a faster clip, they could also deliver superior returns to those in the FTSE 100.
Refreshingly robust
Drinks producer Britvic (LSE: BVIC) would be a go-to pick for me as a novice investor. It’s an easy-to-understand business that boasts big brands and operates in a defensive sector. The most recent trading statement helps back this up.
In the three months to the end of June, Britvic’s revenue came in at just over £431.1m. This was up 11.2% over the same period in 2021. I can’t help but feel the blistering weather conditions we’ve been seeing recently should make for another very decent quarter.
That said, one risk here is that the Robinsons brand owner may not be immune to the cost-of-living crisis. While consumers are generally resistant to switching away from what they know and love, this could become more common later in the year as energy bills soar. As a result, earnings may actually take a temporary dip.
Positively, I’m pretty confident this won’t affect Britvic’s ability to keep returning cash to its shareholders. A dividend yield of 3.4% this year, at the time of writing, is already expected to be covered twice by profit.
And by using this money to buy more shares, I stand to benefit even more when the good economic times return.
None more defensive
A second FTSE 250 share I’d buy as a novice investor would be Worldwide Healthcare Trust (LSE: WWH). As it sounds, this is actually a fund rather than a single company. It has holdings in some of the biggest pharmaceutical groups in the world, such as AstraZeneca, Bristol-Myers Squibb and Pfizer. These are not the sort of companies that are likely to go bust.
Why? Because there are few more resilient markets than healthcare. As incredible as progress in medicine and treatment has been in recent decades, we all need it sooner or later. As a new investor, I’d find this predictability comforting as I find my feet in the stock market.
It’s not all jam. The fact this is an investment trust run by humans rather than machines, which means the management fees are higher. A risk here is that this doesn’t guarantee better performance. In fact, it could lag the market return!
This brings me to my final point…
A safer alternative for FTSE 250 investing
The movement of share prices is impossible to predict in the near term. As a result, I would only ever invest in either of the above if I could deal with losing money, if only on paper, for a while. I’m a firm believer that true investing is about buying shares for years. It’s the Foolish way.
Then again, a cheap exchange-traded fund that tracks the return of the whole FTSE 250 index is another option. Yes, my money might grow at a slower rate. Nevertheless, it will be spread around 250 businesses operating in a vast number of different sectors (e.g. housebuilders, retailers and tech firms) and not just consumer goods or healthcare.
Regardless of experience, it always pays to consider my financial goals and risk tolerance before buying anything!
