Welcome to the latest edition of the ii Top 50 Fund Index, which ranks the most-popular funds, investment trusts and exchange-traded funds (ETFs) in each quarter. Each quarter, we look at how the index has changed, highlighting key trends. Here’s what caught our eye in the first quarter of 2026.
Investors broaden their horizons In the two and a half years since we started this quarterly index, the number of global funds has dropped to its lowest level, falling from 15 to 12 at the end of March. This could reflect concerns over the heavy weighting to the US, with a typical global tracker fund or ETF allocating over 70% to the country. The concentrated nature of US stock market performance over recent years, which has been heavily influenced by the world’s biggest businesses, the so-called Magnificent Seven, may also be giving investors pause for thought. Another related concern among some investors is the heavy spending on artificial intelligence (AI) infrastructure. This has prompted more scrutiny over whether the world’s largest companies – Microsoft, Nvidia, Amazon, Alphabet, Apple, Meta Platforms and Tesla – can deliver the kind of growth that will satisfy elevated expectations. In addition, with other markets outside the US offering lower, and potentially more compelling valuations, there’s been a pivot in outlook, with our own UK market seeing an uptick in demand of late. The number of UK funds in our index has risen from three to seven.
Top 50 Fund Index – April 2026
While there are various ways to build a portfolio, one useful strategy is the core and satellite approach. Core holdings, such as multi-asset funds or those investing in global shares, are among the contenders as such approaches can, in theory, work for the long term as they shouldn’t give you any nasty surprises. As a rough rule of thumb, core holdings could collectively comprise around 70% of a portfolio. The remaining 30% is where investors can consider being more adventurous by seeking out higher-risk funds in pursuit of higher rewards. Among the options are funds that invest in themes, which investors are showing a preference for at present, with commodities, technology and renewable energy infrastructure proving particularly popular. Other funds that fall into the adventurous category are those that invest in the emerging markets or Asia Pacific. iShares Core MSCI Emerging Markets ETF is a new entrant in the first quarter, joining Henderson Far East Income. However, funds with a dedicated focus on smaller companies, which are also potential satellite holdings, are not represented in the index at all. However, a number of funds in the index do have some exposure to smaller-sized firms. Three new areas appearing in the index this quarter are defence via VanEck Defense ETF, copper through Global X Copper Miners ETF, and a very specialist space tech play (in the Growth Capital sector) in the form of Seraphim Space Investment Trust. It is interesting to note declining demand for money market funds over the three-month period, with the number in the index falling from six to three, despite the notable uptick in volatility in March in response to conflict in the Middle East. Such funds, which offer a cash-like return that is usually close to the level of UK interest rates, remain a compelling option for investors who are more cautiously minded or those who are tactically seeking some defensive exposure.
The ii Top 50 Q1 2026 Ranking Change from last quarter Fund/trust/ETF What it invests in Active or passive ?
1 ↑ 1 iShares Physical Gold ETC Commodities Passive 2 ↑ 1 iShares Physical Silver ETC Commodities Passive 3 ↓ 2 Royal London Short Term Money Market (accumulating) Money markets Active 4 ↑ 4 Artemis Global Income Global shares Active 5 ↑ 6 Vanguard FTSE All-World ETF (distributing) Global shares Passive 6 ↑ 3 Vangaurd FTSE Global All Cap Index Global shares Passive 7 ↓ 3 Vanguard LifeStrategy 80% Equity Shares and bonds (multi-asset) Passive 8 ↑ 9 Global X Silver Miners ETF Commodities Passive 9 ↑ 1 HSBC FTSE All World Index Global shares Passive 10 ↓ 5 Vanguard S&P 500 ETF (accumulating) US shares Passive 11 ↑ 1 Vanguard LifeStrategy 100% Equity Global shares Passive 12 ↓ 6 Vanguard S&P 500 ETF (distributing) US shares Passive 13 ↑ 1 Scottish Mortgage Global shares Active 14 ↑ 18 WisdomTree NASDAQ 100 3X Daily Leveraged ETF Technology shares Passive 15-Greencoat UK Wind Renewable energy infrastructure Active 16 ↓ 3 Vanguard LifeStrategy 60% Equity Shares and bonds (multi-asset) Passive 17 ↑ 4 Vanguard FTSE All-World ETF (accumulating) Global shares Passive 18 ↑ 8 WisdomTree Physical Silver ETC Commodities Passive 19 ↑ 12 iShares Core FTSE 100 ETF (distributing) UK shares Passive 20 ↑ 2 City of London UK shares Active 21 ↑ 13 Artemis SmartGARP European Equity European shares Active 22 New entry Seraphim Space Growth capital Active 23 ↑ 3 Jupiter Gold & Silver Commodities Active 24 ↑ 23 BlackRock World Mining Commodities Active 25 ↓ 5 Fidelity Index World Global shares Passive
26 ↓ 19 L&G Global Tech Index Trust Technology shares Passive 27 ↓ 2 iShares Core MSCI World ETF Global shares Passive 28-Amundi Smart Overnight Return ETF Money markets Passive 29 ↓ 5 Polar Capital Technology Trust Technology shares Active 30 New entry Global X Copper Miners ETF Commodities Passive 31 ↓ 12 3i Group Private equity Active 32 ↑ 14 WisdomTree Silver 3x Daily Leveraged Commodities Passive 33 New entry VanEck Defense ETF Defence shares Passive 34 ↑ 8 Vanguard FTSE All World High Dividend Yield ETF Global shares Passive 35 New entry Vanguard FTSE UK Equity Income Index UK shares Passive 36 ↓ 18 Invesco EQQQ NASDAQ 100 ETF Technology shares Passive 37 ↑ 8 VanEck Semiconductor ETF Technology shares Passive 38 ↓ 3 Invesco FTSE All-World ETF Global shares Passive 39 New entry Artemis SmartGARP UK Equity UK shares Passive 40 New entry Vanguard FTSE 100 ETF (distributing) UK shares Passive 41 ↓ 11 Temple Bar UK shares Active 42 New entry iShares Core MSCI Emerging Markets ETF Emerging market shares Passive 43 ↓2 WisdomTree Physical Gold ETC Commodities Passive 44 New entry iShares Core FTSE 100 ETF (accumulating) UK shares Passive 45 ↓ 7 Henderson Far East Income Asia Pacific shares Active 46 ↓ 30 VanEck Crypto and Blockchain Innovators ETF Cryptocurrency shares Passive 47 ↓ 24 Royal London Short Term Money Market (distributing) Money markets Active 48 New entry The Renewables Infrastructure Group Renewable energy infrastructure Active 49 ↓ 20 NextEnergy Solar Fund Renewable energy infrastructure Active 50 New entry Artemis Global Income (distributing) Global shares Active
A key trend in the first quarter of 2026 was increased demand Investors focus on UK large company plays 12 14 15 17 19 20 21 24
Investment Trust 11 16
Exchange-traded fund (ETF) Q1 2025 Q2 2025 10 11
Index fund (passively managed) Q3 2025 Top 50 Fund Index – April 2026 Q4 2025 9 8 8 6 6 5 7 Fund (actively managed)
Q1 2026
For funds investing in the UK. In terms of how investors gained exposure, three of the four new UK entrants are passively managed, meaning they seek to replicate the return of a certain part of the UK stock market. Vanguard FTSE UK Equity Income Index, the highest-ranked new UK fund, consists of shares “that are expected to pay dividends that generally are higher than average”. Therefore, its performance and income generation is heavily influenced by the biggest FTSE 100 dividend stocks. While Vanguard FTSE 100 ETF and iShares Core FTSE 100 ETF (with both accumulation and distributing share classes featuring) seek to track the performance of the FTSE 100 index, which houses the 100 largest UK-listed companies. The other new entrant, Artemis SmartGARP UK Equity, is actively managed, meaning it attempts to outperform a standard tracker fund. Its performance has been strong over multiple time periods, helping attract investors. Of the other UK funds in the index two are actively managed. City of London is a favourite among income seekers due to its remarkable consistency in raising its dividend every year since 1966
Ian Cowie looks at a shaken but high-yielding investment trust sector.
24th April 2026
by Ian Cowie from interactive investor
Wars in the Middle East and Ukraine dramatically demonstrate the importance of energy self-sufficiency by squeezing Britain’s traditional supplies of oil and liquefied natural gas (LNG).
But this week the government reacted to rising demand for renewable energy from our own wind and solar sources by imposing yet another tax hike on this sector.
No wonder City cynics say there is no situation so bad that political intervention cannot make it worse.
On a brighter note, several investment trusts focused on renewable energy infrastructure now yield double-digit income while trading at even bigger discounts to their net asset value (NAV).
The average of 17 funds in this sector now pays dividends equal to 10.5% of their share price, which is an eye-stretching 32.4% below their NAV.
So, investors brave enough to bet that government bungling cannot go on forever are being well paid to be patient optimists.
More intervention?
Less happily, the recent history of governments talking renewables up while taxing them down is not encouraging.
This week the energy department proposed increasing a tax called the Electricity Generators Levy from 45% to 55%.
It also wants to introduce Fixed Price Contracts (FPCs), switching away from Renewable Obligation Certificates (ROCs) to Contracts for Difference (CfDs). Do try to keep up.
Never mind all the acronyms and jargon, Iain Scouller, an analyst at the wealth manager Canaccord Genuity, pointed out: “This is the third piece of tinkering with investors’ returns in under six months.
So, what ought to be a straightforward renewable energy strategy to keep Britain’s lights on, without depending on dictators in Russia or the Middle East for oil or LNG, turns out to be heavily dependent on the varying whims of our own politicians. Perhaps we should not be surprised to see subsidies cut and taxes hiked.
However, market forces – in the form of reduced supply and relatively fixed demand forcing up prices – may prove more powerful than political interference. Markuz Jaffe, an analyst at the broker Peel Hunt, said: “Higher power prices typically have a positive impact on the revenues of renewable energy generators.
“Investment trusts in this sector also benefit from higher inflation-linked subsidies, such as ROCs, or remuneration mechanisms, such as CfDs, which adjust for the latest potentially higher inflation data.”
Higher prices as a headwind
As a result, investment trusts in this sector could benefit from what would be bad news for most companies; such as higher energy prices and inflation.
Put another way, this out-of-favour sector might be inversely correlated with most other assets and offer valuable diversification for a balanced portfolio in future, as well as dividends now.
Setting aside the generalities, what about the specifics?
is the Association of Investment Companies (AIC) Renewable Energy Infrastructure sector leader by share price total returns over the last five years and decade, with a dividend yield of 10.5% after raising shareholders’ pay by an annual average of 7.8% over the last five years.
It is important to understand that dividends are not guaranteed and can be cut or cancelled without notice. However, if UKW could sustain its current rate of ascent, shareholders’ annual income would double in less than a decade.
Against all that, the capital performance of this £3.9 billion fund has fallen off sharply; largely for the reasons described above.
UKW generated total returns of 68% over the last decade, before a meagre 9.3% over five years, followed by a loss of 0.3% over the last year. Seen in that light, its share price trading 26% below NAV is not surprising.
Worse still, the Conservatives and Reform are even more critical about wind power than Labour, which at least pays lip service to this sector.
Scouller commented: “Looking forward, there is obviously significant political risk to renewables such as any new CfD schemes after the next UK general election, due within three years.
“While investors want certainty, we are seeing continual tinkering by government. There is a risk that some private wealth managers will take the view that this sector is uninvestable, given continual changes.”
Here and now, while I hold UKW in my ISA for tax-free income, political risk is the reason I prefer to have more of my money invested in Ecofin Global Utilities & Infra Ord EGL
This global fund is now the fifth-most valuable asset among 57 shares in my forever fund.
EGL offers exposure to renewable energy, as well as fossil fuel producers and distributors, to generate total returns of 81.5% and 48% over the last five year and one-year periods.
This £266 million fund is due to celebrate its first decade in its current format next September, after formerly trading as Ecofin Water and Power Opportunities (EWPO), where I first invested in March 2011. The current yield is just over 3% rising by an annual average of 5.2% over the last five years.
Many debates about the advantages and disadvantages of fossil fuels versus renewable energy generate more heat than light. Perhaps the most investors can hope for is less political interference in future.
Ian Cowie is a freelance contributor and not a direct employee of interactive investor.
has topped our table for the first time in 12 months, with a handful of other specialist investment trusts also breaking into the top 10 list.
The flagship Baillie Gifford trust has enjoyed some strong performance as markets have rallied in recent weeks, while its chunky allocation to SpaceX could also be attracting investors.
The fund might have drawn some attention thanks to concerns that the board of Baillie Gifford stablemate Edinburgh Worldwide Ord EWI
another trust with a big SpaceX position, risks getting overthrown by US activist Saba Capital in a vote due at the end of this month.
The latter last week mooted the idea of capitalising on its strong returns by issuing a C share class. Such fundraising would enable the trust to invest more money in its subsector, while also potentially improving liquidity in its shares.
Meanwhile, the Royal London Short Term Money Market Y Acc remains popular but drops to second place for the first time since February. Value fund Artemis Global Income I Acc drifts up to third. Investors also continue to back tracker funds, with four such names in this week’s table.
Funds and trusts section written by Dave Baxter, senior fund content specialist at ii.
Looking at the table below the good news if you are starting on your investing journey with only modest sums to invest, compound interest takes a while to be noticeable.
If you are investing modest amounts, it’s human nature to want to start out on your journey but initially accrue in a savings account to save charges eating into your invested capital. Charges have been reduced over the years, so it’s not such a problem as before.
Buy one less Starbucks a week, other expensive coffees are available.
The first part of the SNOWBALL’s plan was to earn 1k of income a month from a seed capital of 100k without adding any more funds to the portfolio.
The SNOWBALL should meet its target of 1k a month and consolidate next year and then the SNOWBALL will start to really increase.
Understanding the Snowball Effect
The snowball effect describes how Warren Buffett built his wealth through the power of compounding over time.
Understanding the Snowball Effect The snowball effect is a metaphor for compounding, where small, consistent actions accumulate into significant results over time. Just as a snowball rolling down a hill gathers more snow and grows larger, investments can grow exponentially when earnings are reinvested and allowed to compound. In Buffett’s case, this principle applied to his investments in high-quality companies, where profits were reinvested to generate even greater returns over decades.
The big problem to re-investing dividends is you may find you are wishing your life away as you wait for your dividends to arrive but always remember the goal is to have a happy and secure retirement. To leave your capital to your nearest and dearest and if you could leave a small legacy to your nearest cat and dog home you would leave the world a better place than when you arrived.
The fcast for income for the SNOWBALL at the 6 month stage after the recent portfolio changes is £8,122.00. Do not scale to reach a year end figure as it contains special dividends.
The fcast for income for the SNOWBALL is £13,922.00.
The fcast remains £10,500 and the target £11,240.00
The income fcast for 2027, whilst still to early for it to be a firm fcast is £12,027.00
A yield of 12% versus an annuity of 7% and you keep all your capital.
April is a barren month for earned dividends but dividends should start to stream in next month starting on the 8th of May.
by the interactive investor team from interactive investor
Putting together a portfolio to weather different conditions is no easy task, even in calmer times. For beginner investors it can be particularly puzzling, given there are thousands of funds to choose from.
Dave joins Kyle to explain his choices and how he arrived at the mix of assets. The duo also discuss ‘hands-off’ funds for investors on the lookout for low maintenance options.
Kyle Caldwell, funds and investment education editor at interactive investor: Hello, and welcome to On The Money, a weekly show that aims to help you make the most out of your savings and investments.
The focus for this episode is on how to approach building a portfolio from scratch, and joining me to discuss this topic is Dave Baxter, senior fund content specialist at interactive investor. Dave, welcome back to the podcast.
Dave Baxter, senior fund content specialist at interactive investor: Thanks for having me on.
Kyle Caldwell: So, Dave, you’re going to run through three hypothetical portfolios that you put together for three different risk levels. So low risk, medium risk, and high risk.
Before we delve into those, what would you say are the main considerations when starting to build a portfolio from scratch?
Dave Baxter: I’m going to make two related points. One thing to consider is your time frame and your circumstances, which of course is related. So, say you have 10 or 20 or more years to ride the ups and downs, then really you should be taking maximum levels of risk because you can tolerate that volatility and you’re going to maximise the growth that you can get.
Whereas if you’re, in retirement, for example, or if you for some reason would need your money soon, you need to be a bit more cautious.
The other thing I would highlight, which again is linked, is your appetite for risk and that’s quite interesting because sometimes that can contrast a bit with your actual circumstances. So, you might have time to ride out the ups and downs of markets, but if you’re particularly squeamish and freaked out about a big fall in your portfolio, then maybe just for your own peace of mind, you might take off a bit of that risk.
Kyle Caldwell: I completely agree with everything you’ve just said. I think also when you’re starting out, how much you’ve got to invest is a big factor, and that can help dictate how many funds or investments you choose.
If you’re just starting out with £1,000, you could feasibly just buy one fund, a global index fund or a global exchange-traded fund (ETF), for example, and that’ll give you ready-made diversification, as those types of funds own thousands of shares across the globe, and it gives you lots of exposure to different areas, different countries, different sectors, and different industries.
Whereas as your portfolio hopefully grows over time, or if you do have a larger initial investment amount, you can then consider holding more than one fund, maybe holding several and spreading diversification out even wider.
Dave Baxter: I guess there’s also the question of how interested you are in your investing point. Because perhaps you kick off and, like you said, you’re having a broad tracker and nothing else. Then over time, perhaps you’re watching what it does and then perhaps you go down the rabbit hole of studying a bit more about investing and then you can pick some of your more individual holdings.
Kyle Caldwell: In terms of what to think about when constructing a portfolio, I think the core and satellite approach is a really good rule of thumb for people to consider.
The theory is that if you have around 80% in core holdings, such as a global fund, which you can build a portfolio around, and then the remainder of 20% in more satellite positions, potentially in more adventurous areas such as funds investing in smaller companies or funds investing in the emerging markets or Asia-Pacific region.
A core/satellite approach helps give you a diversified portfolio and plenty of balance.
Dave Baxter: Yeah, definitely.
Kyle Caldwell: So, let’s move on to the three hypothetical portfolios that you have assembled.
We will put links to each article in the podcast episode description, which will contain the tables of the funds that you’ve selected for each of these hypothetical portfolios. But for those who are listening and watching on YouTube, we’re also going to show the tables during parts of this podcast recording.
Let’s first get into the lowest-risk portfolio or the cautious portfolio.
In terms of asset allocation, talk us through how you decided how much exposure to dedicate to shares, bonds, and alternative investments in this one.
Dave Baxter: To be frank, I’ve been very cautious, very conservative, and just put 20% in shares, and that’s a very diversified exposure. Some people who are cautious investors would have more in equities because even if you’re in retirement, you probably still want to keep growing your portfolio.
But one thing I wanted to explore is the dilemma with the defensive or the cautious side of a cautious portfolio. Because in the past you might simply have held a bit of equities and then put loads of money into bonds because, in theory, bonds should gain in value when stock markets fall.
But we’ve seen some challenges there. In 2022, when we saw interest rate rises, you saw bonds falling in tandem with equities and we’ve had a weird throwback to that with the conflict in the Middle East.
So, you’d be hoping that things like government bonds would be gaining in price while equity markets struggle, but they’ve also fallen because bonds hate the prospects of inflation and rate rises. So, rather than going all-in on bonds, we’ve split it up, as you mentioned.
So, we’ve got 40% in bonds, some government bonds, some corporate bonds, and some inflation-linked bonds. Then we’ve got some gold, some commodities, a bit of property, and also a so-called absolute return fund.
Kyle Caldwell:And the final 20%, is it in equities?
Dave Baxter: Yeah, it’s 20% equities. There we’ve gone for one really diversified fund, F&C Investment Trust Ord FCIT
which doesn’t stray too far from the MSCI World Index. I’ve also gone for a MSCI World ex USA tracker, just because F&C is very heavily weighted to the US and, as investors learned or remember from last year, there’s a lot going on beyond the US and there are a lot of returns to be had beyond the US, so I just wanted to give that spread.
Kyle Caldwell: You’ve arrived at 10 different funds, and they’ve all got a 10% weighting. Those listening in and watching the podcast on YouTube will now be able to see a table of your choices.
You’ve already explained F&C Investment Trust. Are there any others that you want to talk through?
Dave Baxter: A lot of these are actually ETFs. I think six of the funds are ETFs or passives of some form because we wanted some very straightforward exposure.
For gold, we simply wanted a physical gold ETC. With bonds, we’ve gone to some broad bond trackers. But perhaps to touch on a couple of more interesting options, you’ve got Schroder Real Estate Invest Ord SREI
,which is focused on physical property. Property can be a diversifier against equities and it might hold up better if we did see that inflationary environment that is going to threaten bond investors.
One other to highlight, and this might be a controversial take, is the Janus Henderson Absolute Return I Acc fund. A lot of people now probably pretty much hate absolute return funds because they haven’t done that well in recent years. But this one has quite a good record of protecting your capital. It’s a so-called long/short fund, so it does have some exposure to just buying equities, but it also does shorting, so betting on the price of a share falling.
Kyle Caldwell: Personally, I’m not a big fan of absolute return funds. I think many of them are too risky. If you see that an absolute return fund has, over a one-year time period, delivered a return of 20%-plus, then it’s not really doing its job. These funds are supposed to provide steady returns in a range of different market conditions. If a fund can go up 20% in one year, it can also go down 20% in one year as well.
Now for each hypothetical portfolio, you’ve also come up with some more hands-off options for people who might want to outsource the decision-making on a cautious portfolio. You’ve mentioned that wealth preservation investment trusts are a potential good option. Could you explain why?
and Capital Gearing Ord CGT They do have some equity exposure, I can’t remember the levels off the top of my head, but it’s relatively moderate. They also use things like bonds, kind of some derivative instruments, exposure to gold, that kind of thing, to try and protect you when stock markets fall out a bit.
So, if you’re a pretty cautious investor and you want a bit of growth but you also want to protect what you’ve spent decades building up, then these trusts should hopefully do that job, and give you a bit of a steady option. But it’s really worth examining the different kind of levers that they use.
Some, like Ruffer, are actually a bit more complicated. They use more esoteric things. And the different funds have very different exposures to different sorts of bonds, to gold, and so on.
Kyle Caldwell: Each of those three wealth preservation investment trusts are potentially really good options for a defensively minded investor. However, the thing to bear in mind is that if you dedicate too much of a portfolio to that type of strategy, you’re potentially going to do that at the expense of long-term capital growth.
Dave Baxter: Yes. That’s the big risk that we overlook with cautious investors, that you are being too cautious and you’re, like you say, giving up growth. Also, you just need to remember that inflation is a thing and you need to keep protecting your portfolio against those rising costs.
Kyle Caldwell:Let’s move on to the medium risk/balanced hypothetical portfolio that you came up with. To start, could you talk us through the asset allocation?
Dave Baxter: So often, again, this is very subjective, but the idea of a balanced portfolio has in the past tended to land on this idea of 60/40, which traditionally was 60% in equities, and 40% in bonds. I’ve done a slightly different version of the 60/40 because of those concerns we discussed earlier about bonds and their outlook.
So, we’ve got 60% in equities but 20% in bonds and then we’ve got 20% split between a gold exchange-traded commodity (ETC) and a commodity ETF. So, hopefully, if bonds do have a rougher period, then those other assets will pick up some slack in terms of protecting investors from equity market volatility.
Dave Baxter: I still, like everyone, slightly fear and respect the world’s biggest market. I don’t want to completely bet against the US, but I’m still going sort of underweight the US with some exposure because, as I mentioned before, lots of markets have done really well beyond the US.
There are still these questions about the outlook for the US now, and, obviously, the current president is causing a lot of headaches for markets. So, I’ve got that US exposure, and I’ve got one other US fund to give a different form of exposure, and then beyond that what I’ve done is taken exposures to the main equity markets.
So, we’ve got the UK, Japan, Asia emerging markets, which are kind of bunched together, and Europe. Rather than just picking, say, a fund for the UK and a fund for Europe, I’m trying to be aware that investment styles can wax and wane. So, of course, as we know, value funds have done pretty well in recent years, but before that, so-called quality and growth funds were doing really well. So, I’ve tried to mix or pair a growth fund with a value fund.
Kyle Caldwell:You’ve got a number of holdings that are a 3% weighting. Do you think that’s sufficiently high enough to do justice in terms of performance?
Dave Baxter: That’s an interesting critique. I mean, you could argue that you might want to be, say, 5% or higher in order to move the dial a bit better. What’s interesting about these pieces is it just really highlights how difficult it can be to build your own portfolio because you’re trying to juggle the different percentages.
I didn’t want to go too wildly underweight the US, but in my quest to do that and have diversification, it means you need to end up with some relatively small fund sizes.
Kyle Caldwell: For me, if you’ve got a holding that’s less than 1%, it’s going to be very, very difficult for that to move the performance dial even if it has spectacular performance. But we are going to come back in a year’s time to review how these portfolios have fared, both on the website and in a podcast episode. So, we will see in a year’s time how much of a difference those 3% weightings have made.
Dave Baxter: Yeah, fingers crossed 3% is the magic number.
Kyle Caldwell: So, for a hands-off investor, which type of funds fit into the category for a balanced investor? The one that springs to mind for me is something like Vanguard LifeStrategy 60% Equity A Acc fund given that it has 60% in shares and 40% in bonds?
Dave Baxter: Yeah. That’s the big beast, isn’t it? It’s a nice no-stress option. It’s very simple. They don’t move those allocations around.
I guess, though, given that I was talking about the question marks around the reliability of bonds, a big criticism of that whole LifeStrategy range is that their only diversifier is bonds.
There are rivals to LifeStrategy, for example BlackRock MyMap and a few others. They do delve a little bit into so-called alternative assets, so they try and diversify a bit differently beyond bonds.
There’s a whole universe out there, but there are also active multi-asset funds, which should try and give you that mix.
Kyle Caldwell: And, of course, at interactive investor we also have our own Managed ISA range.
Let’s now move on to the adventurous portfolio. So, if you’re investing in an adventurous manner, you could in theory have 100% of your portfolio in shares. Is that what you’ve chosen to do?
Dave Baxter: I’ve done 100% in so-called risk assets, but it’s not all shares. Obviously, that’s a very big bit of industry jargon, but it’s 92%, I believe, in equities. Then I’ve chucked the remaining 8% into different forms of private asset exposure.
There’s this argument that listed or public equity markets are shrinking and we’re no longer seeing some of those great growth stories – the most obvious example at the moment being SpaceX – and that they get a lot of their growth before they actually list on to the stock market.
So, I just wanted to spice things up a bit by giving some of that exposure and interestingly, again, it is a dilemma because perhaps some people would argue that an adventurous portfolio now needs to have more in private assets and less than I’ve put into listed.
Kyle Caldwell: And with this adventurous hypothetical portfolio, you’ve once again opted for 15 holdings, and you’ve also again selected iShares Core S&P 500 ETF as the biggest weighting – it accounts for 35% of this portfolio. Could you talk us through the rest of the line-up and how the adventurous portfolio differs from the medium-risk portfolio?
Dave Baxter: Yeah. So, I’ve tried to have a string of continuity between the three funds. In this case, I’ve stuck with the whole S&P as a core and then paired funds with different styles for given regions. To give an example, we have BlackRock European Dynamic A Acc, which is flexible but can be quite quality growthy, with WS Lightman European R Acc – that’s a value fund. So, that’s how it’s similar to the balanced portfolio.
How it’s different is that I have put in a few punchy satellite funds. So, we’ve got Scottish Mortgage Ord SMT
which is an interesting one because it’s kind of a value fund, but it also holds things like holding companies and it has a lot in Japan. So, it’s offering you access to growth opportunities that you’re not really getting elsewhere. So, that could have some potential.
And then we’ve gone for some private exposure, as I mentioned. So, we have HarbourVest Global Priv Equity Ord HVPE that’s one of those big, sprawling private equity trusts. It has exposure to so many different funds and hundreds, I think, of underlying companies. So, that’s a well-diversified PE option.
It’s catching that really exciting trend, again predominantly in private assets, and also riding the defence spending trend too.
Kyle Caldwell: And for a more hands-off option, which types of funds would you say fall into the adventurous category?
Dave Baxter: So, you’ve got your simple global trackers, and you can have different mixtures in terms of what exposure you have to the US. LifeStrategy has its own 100% Equity fund and that is much more UK-focused than, say, the MSCI World index.
But don’t forget the active fund because there are some global funds – I mentioned F&C before – which are quite diversified and they can try and act as a one-stop shop.
I would caution that perhaps with some of the really popular names like Scottish Mortgage and Fundsmith Equity I Acc, they can actually be quite focused funds. So, I don’t know if you would necessarily put all your money in those. You probably want to go for a wider spread.
they own hundreds of companies. That does give you greater levels of diversification, and they are a bit more ‘Steady Eddy’ than, say, a Scottish Mortgage or a Fundsmith Equity, which while they do have more potential to outperform an F&C or an Alliance Witan, at the same time, they are more likely to give you more of a volatile ride at certain points.
Dave Baxter: Yeah. It depends on your belief in those stock pickers, doesn’t it, as well, and how much risk you want to take and how much of a bet you want to take on, say, Terry Smith or the Baillie Gifford team.
Kyle Caldwell: Dave, thank you for running through each of those three hypothetical portfolios. As mentioned earlier on in the podcast, we’ll put links to each of the articles in the episode description. That’s all we have time for today. So, thanks Dave for coming on.
