7 top funds I’d invest in for 2021

Edward Sheldon lists seven top funds he likes for 2021. All of these have smashed their respective benchmarks, and the FTSE 100, in recent years.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Before investing in actively-managed funds, it’s important to do some research. Many funds don’t beat the market consistently over time.

Here, I’m going to highlight seven top funds I like for 2021 and beyond. All of these have smashed the market in recent years and I think they’ve a good chance of delivering strong long-term returns for investors going forward.

Top UK equity funds for 2021

Starting with UK-focused funds, one of my top picks in this area is Lindsell Train UK Equity. This fund, which is run by star manager Nick Train, has been a consistently good performer. Over the last five years, it has returned about 60% versus 27% for a FTSE 100 tracker.

Train invests in a similar way to Warren Buffett, focusing on companies that are highly profitable and that have strong competitive advantages. It’s a good approach, in my view. Top holdings include Unilever, Diageo, and Relx.

Another fund that’s run with a Buffett-like focus is CFP SDL UK Buffettology. The difference between this fund and Lindsell Train however, is it has more exposure to smaller companies. Top holdings here, for example, currently include Games Workshop and Liontrust Asset Management. This has been an excellent performer for years. Over the last five years, it’s returned about 84%.

In the sustainable investing space, I like Royal London Sustainable Leaders. This fund’s aim is to achieve capital growth over the medium term. It does this by investing at least 80% of its capital in the shares of UK companies listed on the London Stock Exchange deemed to make a positive contribution to society. It’s shown that investors can invest responsibly without having to sacrifice returns. Over the last five years it’s up about 65%. Top holdings include AstraZeneca, Experian, and the London Stock Exchange.

Finally, in the equity income area, my favourite fund for 2021 is TB Evenlode Income. It currently offers a yield of around 3%. This is another fund that focuses on high-quality businesses. Top holdings currently include Relx, Unilever, and Diageo. Over the last five years it’s returned nearly 60% – beating most UK equity income funds comfortably.

Global equity funds

In the global equity space, I like Blue Whale Growth. I’ve named it as my top fund for 2021. This is a concentrated growth fund run by Stephen Yiu. I like Yiu’s approach – he looks for high-quality growth companies at a reasonable valuation. Top holdings currently include Microsoft, Visa, and Adobe. It’s returned about 70% over the last three years.

Of course, I can’t discuss top funds and not mention Fundsmith. This fund, which has been a top performer for over a decade now, has turned £10k into more than £50k since its launch in 2010. It’s run by Terry Smith, who also invests like Buffett. Top holdings currently include Microsoft, PayPal, and Facebook.

Finally, for a more adventurous play, I like Baillie Gifford Global Discovery. This is riskier than Blue Whale and Fundsmith. It currently holds stocks such as Tesla, Ocado, and Teladoc Health. However, it’s also been a great performer. Over the last five years it’s returned 240%. I think this fund could be worth a small investment as a high-risk, high-reward play.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Edward Sheldon owns shares in Unilever, Diageo, Microsoft, PayPal, Teladoc Health, Experian and has positions in Fundsmith and Blue Whale Growth. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. The Motley Fool UK owns shares of and has recommended Facebook, Microsoft, PayPal Holdings, Tesla, and Visa. The Motley Fool UK has recommended Diageo, Experian, RELX, and Unilever and recommends the following options: long January 2022 $75 calls on PayPal Holdings. 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.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »