Growth investing is a popular strategy that can be an effective way of building up your wealth, especially in the earlier stages of your investing career, when you can afford to take on a little more risk. However, just because you’re interested in growth stocks, doesn’t necessarily mean that you have to be an expert growth stock-picker yourself. There are a number of good mutual funds that focus on this area of the market, and investing through a fund can be a good way to diversify your capital and lower your risk.
Today, I’m looking at three top UK funds that have a growth focus.
Slater Growth Fund
The Slater Growth Fund is very well regarded among UK growth investors. Run by Mark Slater, who has an excellent reputation, the fund aims to achieve capital growth by investing mainly in UK stocks, although it can invest internationally. Slater looks for companies that are undervalued and have the potential for a share price re-rating.
The fund currently holds around 50 stocks across a range of market capitalisations. For example, in the top 10 holdings, there are several FTSE 100 companies, including Prudential and ITV, but also plenty of exciting smaller companies such as First Derivatives and Restore.
The performance of the fund has been fantastic, returning 11%, 40% and 115% over one, three and five years respectively. Fees are reasonable with the ongoing charge at 0.79% per year through Hargreaves Lansdown.
Lindsell Train Global Equity
Like Mark Slater, portfolio manager Nick Train also has a fantastic stock-picking track record. In fact, he’s often referred to as ‘Britain’s Warren Buffett.’ If you’re looking for exposure to global growth stocks, check out the Lindsell Train Global Equity fund.
This fund is a concentrated portfolio of around 30 holdings that are held for the long term. Train looks for conservatively financed companies that can produce high returns on capital and higher than average operating margins. The fund can invest in companies of all sizes, including small-caps. A glance at the top 10 holdings reveals familiar FTSE 100 names such as Unilever, Diageo and London Stock Exchange Group, as well as companies listed in Japan, Europe and the US.
The performance of this fund has been outstanding, returning 19%, 61% and 122% over one, three and five years respectively. Fees are low on Hargreaves Lansdown, with the ongoing charge just 0.54% per year.
Marlborough UK Micro-Cap Growth
Marlborough is a boutique fund manager that has a range of top performing funds. Its UK Micro-Cap Growth fund, run by Giles Hargreave, focuses on investing in smaller growth companies with a market capitalisation under £250m. The aim of the fund is to provide a total return of capital and income in excess of that achieved by the FTSE Small Cap index (excluding investment companies) over the medium-to-long term.
This fund is spread out over nearly 300 companies in order to lower stock-specific risk. Top holdings at present include Learning Technologies Group, Imimobile and Quixant. Performance has been excellent in recent years, with investors enjoying returns of 19%, 78% and 135% over one, three and five years respectively. Ongoing charges of 0.74% per year through Hargreaves Lansdown look reasonable. For those comfortable with the volatility associated with small-caps, this fund could be a good choice.
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Edward Sheldon owns shares in Unilever, Diageo, ITV and First Derivatives. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Diageo and ITV. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.