Investing in funds can be a great way to get exposure to the stock market. Picking a fund can be a daunting process, however. On Hargreaves Lansdown, for example, there are currently over 3,500 products to choose from.
Here, I’m going to highlight the five funds I currently own in my ISAs and SIPP (Self-Invested Personal Pension). These products are not going to be suitable for all investors. However, they match my goals (long-term growth) and risk tolerance.
Fundsmith Equity
My largest fund holding across my ISAs and SIPPs is currently Fundsmith Equity. This is a global equity product managed by Terry Smith. It has a fantastic record – since its inception in 2010 it has returned about 18% per year. Past performance is not indicative of future results though.
The reason I like this fund is that Smith has a similar style to that of Warren Buffett. He simply invests in high-quality businesses (at a reasonable price) and holds them for the long term. I think this is a great approach to investing.
This fund is quite concentrated – it only holds around 30 stocks. This adds risk. However, I’m comfortable with this approach. I see Fundsmith as a great core holding.
Blue Whale Growth
My second-largest fund holding is currently Blue Whale Growth. This is a global equity product that is managed by Stephen Yiu. Like Smith, Yiu invests in high-quality businesses. However, he’s a little more active in his approach.
This fund doesn’t have a long-term track record. It was only launched in 2017. Yet since then, it has delivered excellent returns. Over the last three years it has returned about 75%. There’s no guarantee it will continue to deliver high returns. However, I like Yiu’s investment style, so I’m willing to back him.
Lindsell Train Global Equity
My third-largest fund holding is Lindsell Train Global Equity. This is managed by Nick Train and Michael Lindsell, who also focus on high-quality companies. It has a great long-term track record having returned about 350% since its launch in 2011 (versus about 200% for the MSCI World index).
This fund – which is also quite concentrated – has underperformed a little in recent years. Last year, it returned 11.7% versus 12.3% for its benchmark. I’m willing to stick with it, however. I like the investment approach and the types of companies the fund invests in.
Threadneedle European Select
My fourth-largest holding, the Threadneedle European Select fund, offers something different. This product is purely focused on Europe.
Europe is often neglected by UK investors. That’s a shame, in my view, because there are some world-class businesses listed in the region. This particular fund currently owns some fantastic companies such as Nestlé, Pernod-Ricard, and L’Oréal.
The fund has been a solid performer for me. Over the last five years, it has returned about 82%. The pure focus on Europe adds risk, but I see it as a good portfolio diversifier.
Polar Capital Global Technology
Finally, I have a smaller position in the Polar Capital Global Technology fund. This product is focused on the technology sector.
This fund is higher-risk than the other ones because it’s focused on one sector. If the technology sector crashes in the future (which it often does), this fund will most likely underperform.
However, I’m bullish on the tech sector. In the long run, I think it can potentially boost my returns.
