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.
The post 7 top funds I’d invest in for 2021 appeared first on The Motley Fool UK.
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.
Motley Fool UK 2021