Best UK Funds In October 2022

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want to earn money from investor stocks and shares Against the backdrop of rising inflation, rising interest rates, as well as the economic fallout from the ongoing war in Ukraine, 2022 has so far experienced a roller-coaster ride.

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By comparison, the London stock market has weathered the storm much better this year than other major financial centres, especially the US.

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Take the FT-SE 100 for example. Since the beginning of January this year, the stock market index of major UK companies has gained about 2%.

Hardly what you would describe as an earth-shattering performance from ‘Footsea’. But it’s almost a cause for celebration when compared to the events in America.

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That’s because, at the time of writing (August 2022), the S&P 500 is down about 13% this year. It’s a better picture than last month, when the world’s most influential stock index was down 20% year-on-year and stocks were sluggish in so-called ‘bear market’ territory.

The main reason for such a notable divergence in the recent fortunes of the UK and US markets revolves around the companies that make up their respective stock indexes.

The FT-SE 100 includes stalwarts from traditional industry sectors such as energy, banking and tobacco production. Unlike in the US, it does not include many ‘high-growth’ companies – those that perform best when interest rates are low and economies begin to heat up.

In recent years, this trans-Atlantic gap has meant that investors whose holdings were biased to the UK suffered significantly in terms of performance compared to their counterpart US portfolios. However, for the time being the tables have turned.

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In the FAQ below, we look at the matter of investing in UK funds in more detail.

We asked Rob Morgan, investment analyst at Wealth Managers, Charles Stanley, to identify five UK funds suitable for potential investors with varying risk profiles.

A round-up of their comprehensive investing methodology is listed in alphabetical order below, along with the reasons for their choice.


ftf franklin uk

ftf franklin uk small companies

fund size: £200 million

Fund Type: OEIC

Target Index: Numis Small Companies Ex-Investment Trust Index

Annual Fund Charges: 0.82% p.a.

key points

  • Small companies are an exciting if high-risk sector that can add diversification to a portfolio.
  • The fund has a balance of smaller companies ranging from growth-oriented businesses to potentially under-appreciated ‘value’ names. Holdings at the end of July 2022 included Alpha FX Group and Foresight Group Holdings.
  • This concentrated portfolio invests only in a relatively small number of companies. This magnifies the impact of each holding on performance and can lead to meaningful sector-beating returns if managers get their stock picks right. If they don’t then the opposite is true.
  • The fund has done a good job of capturing the market growth and dynamics of UK small companies, albeit with a more conservative valuation discipline than some of its peers.
  • The fund is able to invest flexibly across multiple opportunities in the small corporate sector. It also makes good use of the initial public offering (IPO) market, buying into new companies in the stock market.

Who should invest?

Smaller companies may be more risk-averse because they are often less diversified, or in an earlier stage of growth. This fund is therefore for more adventurous investors or those looking to diversify a portfolio focused on larger businesses.


iShares

iShares Core FTSE 100 UCITS ETF

Fund Size: £10.6 billion

Fund Type: ETFs

Target Index: FTSE 100

Annual Fund Charges: 0.07% per annum

key points

  • Specifically designed for direct and low-cost access to the UK market. exchange traded fund Or the ETF (see FAQ below) is highly competitive.
  • It is a ‘physically replicated’ fund that has a strong track record of closely following all similar stocks and the same proportion of the FTSE 100 Index.
  • This multi-billion pound ETF becomes easy to trade with a tight spread between the fund’s ‘buy’ and ‘sell’ prices.
  • There is an income version of the fund for those wishing to receive Dividend (paid quarterly) instead of reinvesting them in the portfolio.

Who should invest?

Investors looking for ‘plain vanilla’ exposure to the UK market, or those who are cost-conscious about the funds they purchase.


JOHCM UK

JOHCM UK Equity Earnings

Fund Size: £1.7 billion

Fund Type: OEIC

Target Index: FTSE All-Shares

annual fund charges: 0.70% p.a.

key points

  • The goal is to achieve long-term capital growth and generate a dividend yield above the FTSE All-Share Index average.
  • There is a strict yield (earnings) discipline, with managers seeking to invest in fundamentally strong companies at an attractive price and relatively high initial yield.
  • The fund typically has significant investments in small and medium-sized stocks, which often gives it a different holding profile to other income funds.
  • Clive Beagles has co-managed the fund with James Lowen since its inception in 2004, an example of longevity rarely seen in modern-day fund management.
  • With the good performance of energy and commodities, the portfolio can harness rising prices in these sectors. Holdings include BP, Glencore and Barclays.

Who should invest?

Those looking for income will find the yield currently attractive at 4.4%. This has the potential to grow over time as dividend payouts increase. The valuation-sensitive approach also makes the fund a good counterweight to more growth-oriented funds.


liontrust

Leontrust Sustainable Future UK Growth

Fund Size: £776 million

Fund Type: OEIC

Target Index: MSCI UK

Annual Fund Charges: 0.9% p.a.

key points

  • The fund invests in 40 to 60 companies that meet its norms for environmental and social responsibility.
  • The portfolio is constructed from high-quality and sustainable companies that benefit from long-term structural trends. Holdings include Trainline plc and AstraZeneca.
  • Investment topics include safety, resilience, health, quality of life and efficiency, analyzed for each stock. Ethical, Social and Corporate Governance Factor with return potential.
  • The fund management team headed by Peter Michaelis is highly regarded.
  • For those who want to invest more permanently, this fund is a good option. However, an inclination towards high-growth companies and a concentrated portfolio means that returns can be expected to deviate significantly from index or tracker funds.

Who should invest?

Those looking to invest more responsibly, or embrace long-term structural trends in technology, healthcare and clean energy.


Man GLG

MAN GLG Undervalued Assets

Fund Size: £1.1billion

Fund Type: OEIC

Target Index: FTSE All-Shares

Annual Fund Charges: 0.90% p.a.

key points

  • The fund takes a ‘value’ approach, buying cheaper stocks in the hope that over time their merits will be more widely appreciated and share prices will rise.
  • It has an established, disciplined process with an emphasis on financial strength. Managers, headed by Henry Dixon, target companies whose share prices do not fully reflect their intrinsic value and whose profit flows are undervalued. Holdings include Grainger plc and Redro Group.
  • The portfolio is managed dynamically, with assets sold when they are deemed fair value to managers and replaced with new ideas in a cheaper area.
  • To avoid buying ‘value traps’ – investments that appear to be of little value but turn out to be cheap for some reason – the team prefers to see good cash generation and operating momentum before investing.
  • Such a pricing strategy can work well in a rising inflation and interest rate environment, as cheaper companies with flexible earnings and balance sheet strength can provide relative stability.

Who should invest?

This fund offers diversification from several popular funds that mostly focus on growth potential. It can help balance a portfolio that relies heavily on these, or it can provide a good quality standalone UK fund for those who want a back-to-basics approach that is low-interest. Do not rely on rates.


methodology

Rob Morgan of Charles Stanley says his fund selection philosophy is to focus on the four Ps: people, process, performance and price. This is done by examining key characteristics such as risk, style, stability, governance, charge, operation, inflow/outflow and capacity constraints.

He adds: “Our goal is to identify the key factor, or ‘edge’, that a fund has. It could be that it does something different or better, or in the case of passive or tracker funds, Whichever index an index aims to follow rather than be left behind, it may be that they offer the lowest fee available for the approach taken.

“Within the selection we aim to incorporate a variety of styles and approaches to provide diversification and reduce reliance on certain sectors or types of company.”


most frequently asked questions

Why invest in stocks and shares?

there are many reasons investing in stock market – by taking the fight inflation And to put your money as hard as possible, to build a retirement nest egg.

Always be aware that investing in the stock market involves risk and is not suitable for everyone. Before you even consider taking the investment route, it is important to determine your financial goals. Build a ‘rainy day’ cash corpus equal to at least three months of your normal outgoing before diving into investing.

If you’ve weighed the pros and cons and have time on your side (at least five years, preferably more), the next thought is deciding how to…

Credit: www.standard.co.uk /

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