If you’ve wondered whether it is still good to invest in Funds considering the economic situation in the UK in 2023, the answer is yes, there are still excellent Funds overcoming these problems and in which you can invest.
Current Economic Issues and How to Watch Out
We know it is true that the Coronavirus pandemic has severely impacted the UK economy and its devastating long term influence is only starting now. We also see that the UK leaving the European Union (EU) is also currently impacting negatively on the economy.
But luckily, stocks do not always follow the fate of the country they are listed in. Large multinationals included in the FTSE 100 index, are often not moving with the positive or negative economic trend in the countries where they are listed. Some of the currency risks for end investors can also be eliminated by investing in the home market.
Best Performing Funds to Invest in Now
Well-managed Funds are considering all these factors and invest wisely. Therefore Funds are still a good way to invest. They offer their investors access to a diversified collection of stocks and bonds. These stocks and bonds across a range of sectors and markets are then managed in a single fund.
Funds are still the preferred way of investing for investors who are happy to pay a fee to have their portfolio professionally managed.
We’ve looked at various Funds and we’ll discuss three of the best Funds we’ve found to be good to invest in now.
Liontrust Special Situations Fund
Liontrust Special Situations Fund believes in an investment process that involves identifying and investing in companies that have the possibility to sustain a higher than average level of profitability for longer periods than expected. It looks for companies to have characteristics such as intellectual property, strong distribution channels and significant recurring business.
Examples of the fund’s holdings at the end of July included the alcoholic drinks company Diageo, which accounted for 3.7% of its assets, the information and analytics provider RELX, which accounted for 3.4% of the assets, and Spirax-Sarco Engineering which accounted for 3.2%.
At the end of June, Liontrust Special Situations Fund had 40.4% of its assets in FTSE 100 companies, 27.9% in FTSE 250 companies and 23.3% in Aim companies.
In the year to 31 May 2021, an investment in the Fund returned 20.6% (retail class) and 21.8% (institutional class). From the Fund’s launch on 10 November 2005 to 31 May 2021, an investment in the Fund rose by 462% (retail class) and 526% (institutional class). Compare this to a rise of 157% in the FTSE All-Share Index, and 169% from the IA UK All Companies sector, and it is clear why this Fund is one of the best Funds to invest in now.
Although the year-to-year returns of Slater Recovery can be volatile, this Fund is also one of the best Funds to invest in now. We recommend this Fund to investors who are willing to take a higher risk and have a long-term vision of returns on their investments.
Slater Recovery achieves growth by investing in companies with low price and earnings ratios in relation to their earnings growth. The companies they invest in must have strong balance sheets, powerful competitive positions and high returns on capital.
This type of investment is described as “growth at a reasonable price” (Garp). They normally meet companies’ senior managers and only invest in a company if it meets all their criteria.
Slater Recovery had 71 holdings at the end of July. Although it invests in all sizes of companies, nearly three-quarters of its assets were in smaller companies at the end of July 2021. The Fund’s largest holdings at the end of July included the digital publisher Future which accounted for 7.35% of its assets, the life insurer Prudential which accounted for 3.68%, and the pharmaceutical company Clinigen which accounted for 3.12%.
The fund is performing well and it beats many other UK equity funds. Its total return percentage in the first quarter of 2021 was 10.0% and in the second quarter 9.8%.
Henderson Smaller Companies Investment Trust (HSL)
The third Fund we recommend is the Henderson Smaller Companies Investment Trust. Since 2002 it has outperformed the Numis Smaller Companies ex Investment Companies index in 16 of its past 18 financial years. This Fund has a long-term view of their investments and avoids unnecessary turnover. Their average holding period for an investment is more than five years.
Although it has “smaller companies” in the name, the Fund historically has had a focus on mid-caps. It defines “smaller companies” as any company outside the FTSE 100 Index. At the end of its last financial year (31 May 2021) the Fund had 58% of its assets in FTSE 250 stocks, 12% in FTSE Small Cap stocks and 28% in Aim stocks.
Its largest holdings at the end of July included Impax Asset Management, and housebuilder Bellway.
Henderson Smaller Companies Fund is one of the largest, most liquid UK smaller company Funds and therefore an attractive holding for investors. It has delivered NAV total returns over the past 10 years of 358% (that is 16.4% a year). This is better than other similar funds which on average have delivered about 175% in the same period.
Other Funds worth Looking at
Apart from the three Funds discussed in this article, several other Funds also count as one of the top best funds to invest in now in the UK.
You can find them on the internet and it will be worth your time to look at them as well to find the best Fund which will suit your circumstances and expectations.
For your convenience we list three more:
Despite the current economic difficulties in the UK, there are still Funds to invest in now. Search the internet for Funds to invest in and get as much information as you can. You’ll find a Fund that suits you.
RISK WARNINGS AND DISCLAIMERS
The value of stocks and shares and any dividend income, may fall as well as rise, and is not guaranteed so you may get back less than you invested. You should not invest any money you can’t afford to lose and should not rely on any dividend income to meet your living expenses.
We have taken reasonable steps to ensure that any information provided is accurate at the time of publishing. Any opinions expressed are the opinions of the author only.