5 top investment funds for 2023

Putting money into investment funds can be a great way to build wealth over the long run. With these investments, your capital is pooled with the money from other investors and spread over many different stocks by a portfolio manager. The result is broad exposure to the stock market at a relatively low cost.

Here, I’m going to highlight one fund I own going into 2023, and four I’m considering buying for next year. All of these products have good track records and have beaten the market over the long run.

The world’s best businesses

Let’s start with the popular Fundsmith Equity, which I own already. This is a core holding for me.

What I like about Fundsmith is its focus on high-quality businesses that are consistently profitable. These kinds of businesses tend to provide good returns for investors over the long term. I also like the fact it’s a global product, meaning it gives me exposure to top companies listed internationally.

Now performance here hasn’t been amazing recently. However, since the fund’s inception in 2010, it has beaten the broader stock market by about 4% per year. So I’m willing to back it for 2023.

Having said that, I think it’s worth having exposure to other global equity products as well, for diversification. And one I’m looking at is Morgan Stanley Global Brands. This focuses on companies with powerful brands.

The reason I see appeal here is that companies with strong brands tend to have pricing power. This could be valuable in 2023, as inflation is likely to remain high.

It’s worth noting that this fund has outperformed the market in 2022 and has beaten Fundsmith over the last five years. So I think it’s worth a closer look right now.

UK investment funds

Turning to UK funds, one I think could be a good core holding for me is Royal London Sustainable Leaders. This product invests in companies making a positive contribution to a society.

I like that this fund has an ethical focus. I also like the fact it has the flexibility to invest 20% of its portfolio in international stocks.

In 2022, performance here was below par. However, over the last five years, it has beaten the FTSE 100 by a wide margin.

I also like the look of FTF Martin Currie UK Rising Dividends. This fund focuses on companies growing their dividend payouts. In 2022, dividend stocks outperformed and I reckon this trend could continue in 2023. I see this fund as a good way to get exposure.

Of course, as a long-term investor, I also want exposure to top UK growth stocks. And one fund I think could be a good fit for my portfolio here is CFP SDL Free Spirit. This is an under-the-radar product that focuses on high-quality UK businesses.

This one is a little more expensive in terms of its annual fee, but I reckon its long-term track record justifies the fee.

It’s worth pointing out that all of these funds have their own risks. As actively-managed funds, they could all underperform the market in 2023. So I’ll be diversifying my money across a number of products to lower my risk.