Each week we ask an expert for tips on how to invest £10,000. Today we start a new series — investments for children.
Ryan Hughes, 40, is head of fund selection at the investment platform AJ Bell. He said anyone saving for children should be prepared to take more risk. “This implies a focus on shares, given their potential to deliver the strongest returns . . . Also, you will usually be investing over a long period for a child — perhaps 10 years or more — so the impact of any short-term volatility [in the stock markets] is less relevant.” Here Hughes picks his top funds.
Fidelity Index World (up 19.5% over 12 months)
This is a passive fund that tracks the MSCI World index, providing automatic exposure to the biggest and best-known companies in the world at a cost of only 0.15% a year. By simply tracking an index, you avoid paying for an expensive fund manager. [As with all investments mentioned here, the annual fee is paid on top of the charge levied by the fund platform you use to make the investment.]
Having a passive core is a great way to build a portfolio, as it gives broad-based market exposure with the ability to add more opportunistic holdings alongside it. You can be safe in the knowledge that you are not solely reliant on active managers getting their stock selection right. I would invest £4,000 in this fund.
Liontrust Special Situations (up 13.6%)
Anthony Cross has been managing this fund since 2005 and was joined later by
co-manager Julian Fosh. They have a well-defined investment process that looks to identify companies with a sustainable competitive advantage. The result is a portfolio of about 50 stocks that is typically biased towards medium-sized and smaller businesses, making it a strong holding for those thinking longer term.
The annual fee is 0.88%. I would invest £2,000 here.
Invesco Perpetual Asian (up 36.3%)
A further £2,000 goes to a fund focusing on Asia, the engine of global growth, making for an exciting long- term opportunity. The Invesco Perpetual Asian fund has been remarkably consistent over a long period and offers exposure to a wide range of companies.
Its manager, William Lam, uses a flexible approach to build a portfolio of between 60 and 90 holdings. The fund is currently weighted towards China, South Korea and Hong Kong, with large exposures to the likes of Samsung and the Chinese internet company Baidu.
The fund has the added benefit of being cheaper than average for the sector at a cost of 0.90% a year.
Polar Capital Global Technology (up 34.4%)
With such a long time horizon, I am comfortable investing my final £2,000 in this sector, accepting that it may well be volatile.
The people who run the fund, Nick Evans and Ben Rogoff, are hugely experienced technology managers, having worked through the tech bubble more than 15 years ago. They take a totally unconstrained approach, meaning they can find the best tech companies in any sector without being restricted by the benchmark used to measure the performance of the fund.
While familiar names such as Facebook and Apple are among the largest holdings, the team are very happy looking at emerging technology themes, and have 35% in medium-sized and smaller companies that may well include the new big ideas for tomorrow.
The annual charge is 1.16%.