I think these 3 investment funds could make you rich enough to retire in style
We don’t often recommend investment funds on the Fool and when we do, we tend to focus on investment trusts or exchange traded funds (ETFs). These typically have lower charges, which means you get to keep more growth for yourself.
However, some unit trusts have outstanding track records, and charges aren’t as high as they used to be. These three could keep you warm this winter and beyond.
Fundsmith Equity
Terry Smith is one of the most popular UK fund managers, effortlessly picking up Neil Woodford’s mantle. He has combined strong performance with a simple, transparent charging structure: no upfront fees and 1% a year annual management charge.
Fundsmith Equity is now a £16bn giant although be careful, it does have outsize exposure to the US, which makes up 65% of the fund. Interestingly though, tech giants Facebook, Amazon, Apple, Netflix and Google owner Alphabet, don’t appear in his top 10 holdings, which may be a good thing as these so-called FAANGs lose their teeth. Around 18% of the fund is in the UK and the rest in Europe.
The fund is up 138% over five years and although it grew just 4% over the last 12 months, it outperformed its global benchmark which fell 4% over that period. Tempting, but only if you want US exposure right now.
Lindsell Train Global Equity
Lindsell Train Global Equity is also up 140% over five years, and an impressive 11% over the past 12 troubled months, showing that renowned joint managers Nick Train and Michael Lindsell can cut it in bad times as well as good.
The duo have a simple philosophy, one that is quite similar to Terry Smith’s… invest in great companies and hold them forever. Top holdings include Unilever, Diageo, Heineken Holdings, Walt Disney, Pepsico, Paypal and well, you get the point.
Their fund is one-third invested in the UK and one-third in the US, with 20% in Japan, and 10% in Europe. It holds a current concentrated portfolio of stocks, ones Lindsell and Train believe are truly exceptional. It’s relatively small compared to Fundsmith with £5.4bn under management, but has matched it blow for blow.
JPMorgan Emerging Markets
Emerging markets jumped 27% in 2017, according to MSCI, only to fall 12% year-to-date. This has been a tough year for almost every region, though, with the UK and Europe down by an identical amount.
JPMorgan Emerging Markets has grown an impressive almost 50% in the past five years, easily outperforming its global emerging markets benchmark, which rose 35%.
The US-China trade war and rising interest rates are casting a shadow over emerging markets, while Chinese GDP growth is slowing and its debt levels continue to rise. This £1.18bn fund has fallen 10% this year, which is to be expected, especially since its biggest holding is Chinese tech giant Tencent, whose $220bn share price rout this year is the biggest in history.
The fund is 35% invested in China, 17% in India, 10% in Brazil, and 7% in Taiwan, plus a spread of other emerging markets. This may suit those who hope this sector will swing back into favour in 2019, or maybe 2020.
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Harvey Jones does not directly hold any of the stocks or funds mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. harveyj has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Alphabet (A shares), Amazon, Apple, Facebook, PayPal Holdings, Unilever, and Walt Disney. The Motley Fool UK has the following options: long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and short January 2019 $82 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.
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