Funds for beginners

Funds for beginners – a guide to ready-made portfolios

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If you’re new to investing, it can be daunting trying to work out which funds to invest in. The good news is that some investment platforms offer funds for beginners, or ready-made portfolios. Find out what’s on offer.

Funds for beginners

Funds for beginners are aimed at investors who don’t know where to start. They usually work by asking a few simple questions, such as what your investment goal is, whether you want to invest for growth or income and the level of risk you’re willing to take. The investment platform will then suggest a ready-made portfolio based on your answers.

SAVVY TIP: It’s important to point out at the outset that the investment platforms don’t give you financial advice in the way that a financial adviser or financial planner would. This means that the investment platform isn’t recommending that these funds are suitable for you. You’ll normally find some wordy disclaimers on the investing platforms’ websites.

Here is a guide to the funds for beginners or ready-made portfolios offered by seven investment platforms. We’ve listed them in alphabetical order:

Barclays, Ready-made Investments

How many funds are in the list?

Barclays has five growth options and two income options.

What do you have to do as a beginner investor?

If you’re looking for growth for your investments, you need to choose your risk from low to high. If you’re looking for income, you need to choose your risk from moderate-low or moderate risk.

What is the minimum monthly and lump sum investment amounts? 

From £50 a month or a £50 lump sum.

What are the charges?

The total ongoing cost for growth investments is 0.65% per year based on the value of your holding. For income investments, total costs start at 1.65% per year. This is made up of:

  • Fund manager fees (ongoing charges figure): 0.45% per year for growth investments and from 1.45% per year for income investments.
  • Smart Investor customer fee: 0.20% per year or a minimum of £4 per month plus a transaction fee of £3 each time you carry out a transaction, or £1 if you set up a regular investment.

What are the performance figures over one, five and 10 years?

Barclays Multi-Asset High Income Fund began in November 2011, Barclays Multi-Asset Income Fund began in March 2013, Barclays Wealth Global Markets 1 – 5 began in September 2010 so we can’t include ten year figures:

1 Year 3 Year 5 Year
Barclays Wealth Gbl Mkts 1 1.42% 11.89% 14.31%
Barclays Wealth Gbl Mkts 2 3.32% 22.10% 24.89%
Barclays Wealth Gbl Mkts 3 5.49% 32.05% 35.09%
Barclays Wealth Gbl Mkts 4 7.56% 40.55% 42.53%
Barclays Wealth Gbl Mkts 5 8.58% 45.99% 47.78%
Barclays Mul As Inc -0.41% 14.92% 18.42%
Barclays Mul As Hgh Inc 0.46% 6.10% 20.29%

NB. These performance figures are cumulative – namely they provide the total performance over three years and five years – not the annual return.

What information do you get as an investor?

You will receive an annual statement and also links to a half yearly video with Barclays CIO Arne Hassel. In the video, he explains what asset allocation changes they’ve made and why. Barclays send this directly via their regular emails and it’s also available on their website.

Best Invest, Ready-made Portfolios

How many funds are in the list?

There are four funds in the list: aggressive growth, growth, defensive and income.

What do you have to do as a beginner investor?

You choose the portfolio from the described list, choose whether you wish to take income and then choose an account type e.g. ISA, pension, general account or Junior ISA.

What is the minimum monthly and lump sum investment amounts?

The minimum monthly investment is £50 and the minimum lump sum investment is £100.

What are the charges?

There are no initial charges and ongoing costs range from 1.47% to 1.54%. These represent a 0.75% ongoing charges figure and then the costs of the underlying funds held. Each portfolio holds 20 – 30 funds. These are predominantly actively managed funds selected by their research team but also include ETFs and passives where they believe these are better options. The portfolios are regularly rebalanced in line with their asset allocation views and the risk profile of the portfolio and if their views change on a particular fund, these will be switched.

What are the performance figures over one, five and 10 years?

Figures are available for year one to five:

1 Year 3 Year 5 Year
Aggressive growth 8% 36% 48%
Growth 7% 30% 41%
Defensive 3% 13% 22%
Income 3% 17% 27%

NB. These performance figures are cumulative – namely they provide the total performance over three years and five years – not the annual return.

What information do you get as an investor?

This is an online service and accounts can be viewed 24/7. As a user, you get: a current valuation; performance analysis showing how the fund has done in both absolute returns and versus its benchmark; asset allocation (how the portfolio is divided up between shares, bonds, property, commodities, cash and hedge funds / absolute return, a breakdown of the exposure to different geographic regions, the split between large, medium sized and smaller companies, details on the underlying holdings); analysis of how risky the portfolio is based on volatility; access to a telephone and live web chat support team and invites to events and seminars.

Charles Stanley Direct, Foundation Fundlist

How many funds are in the list?

Charles Stanley Direct offers the Foundation Fundlist, a regularly reviewed list of preferred investments across the major sectors selected by their research team. It covers both funds and investment trusts, including passive funds or trackers and actively managed funds.

They also offer Foundation Portfolios, which blend a range of funds selected from the Foundation Fundlist. They describe them as “simple, economical ‘starter’ portfolios”.

The resultant portfolio contains five funds they consider to be ‘best of breed’ in their respective areas. These funds complement one another in terms of asset type, style and approach. They say that this means risk is spread across various investment classes, geographies and industry sectors. However, they don’y manage the portfolios, so you have to decide whether to switch funds and rebalance your portfolio. They do have a range of Charles Stanley Multi Asset funds available, which offer greater diversification and a full service – but the costs are higher.

What do you have to do as a beginner investor?

  1. Select your investment goals from income, growth and income & growth options.
  2. Select your risk level from cautious, balanced or adventurous options.
  3. Each portfolio can be purchased as a ‘fund basket’ through an ISA, Junior ISA, SIPP or Investment Account so you need to choose which account you want.
  4. Review your portfolio regularly to ensure it still meets your needs.

What is the minimum monthly and lump sum investment amounts?

The minimum investment per fund is £50 a month or a £500 lump sum. As a portfolio has five funds you would need to be able to invest £250 a month or a £2,500 lump sum.

What are the charges?

Each fund’s ongoing charges figure averages out at 0.8% – 0.9% across the portfolio. In addition, Charles Stanley Direct charges an annual platform fee of 0.35%. There are no initial or exit costs.

What are the performance figures over one, five and 10 years?

Some of the funds in the portfolios don’t have a ten year history, and there are two with less than five:

1 Year 3 Year 5 Year
Cautious Income 1.6% 17.3% 25.4%
Cautious Income & Growth 1.5% 15.2% 23.5%
Cautious Growth 1.5% 15.2% 23.5%
Balanced Income 7.5% 40.5% 51.3%
Balanced Income & Growth 7.5% 40.5% 51.3%
Balanced Growth 7.5% 40.5% 51.3%
Adventurous Income 7.7% 43.7% 55.2%
Adventurous Income & Growth 7.3% 47.8% n/a
Adventurous Growth 9.4% 63.9% n/a

NB. These performance figures are cumulative – namely they provide the total performance over three years and five years – not the annual return.

What information do you get as an investor?

You get six-monthly statements, plus you can monitor your investments any time through the website or app. The app is available on Apple or Android devices.

Fidelity International, PathFinder

How many funds are in the list?

Fidelity’s Pathfinder range is split into those looking for growth or those looking for income. The PathFinder growth range has ten funds and the PathFinder income range has three funds.

What do you have to do as a beginner investor?

Firstly you have the option to select whether you are looking for growth or income from your investments:

Growth: If you opt for growth, you need to choose your risk level – from avoiding losing money to being comfortable with taking higher risk for higher potential returns.

The final step is to choose what investment approach you would prefer: either have their investment experts spread your money across a range of ‘best in class’ fund managers or have their investment experts spread your money across global markets and asset classes, while keeping costs low.

Income: For income investors, you choose your risk level: defensive/cautious income, balanced income or income & growth.

What is the minimum monthly and lump sum investment amounts?

£1,000 if you’re investing a lump sum and £50 if you have a monthly savings plan.

What are the charges?

On top of their service fee (typically 0.35%), each fund has an ongoing charge. These ongoing charges vary depending on which option you select.

Under the PathFinder growth range the charges are:

  • Fidelity Multi Asset Open Defensive Fund -1.32%
  • Fidelity Multi Asset Open Strategic – 1.13%
  • Fidelity Multi Asset Open Growth – 1.22%
  • Fidelity Multi Asset Open Adventurous- 1.40%
  • Fidelity Open World – 1.58%
  • Fidelity Multi Asset Allocator Defensive – 0.25%
  • Fidelity Multi Asset Allocator Strategic- 0.25%
  • Fidelity Multi Asset Allocator Growth – 0.25%
  • Fidelity Multi Asset Allocator Adventurous – 0.25%
  • Fidelity Allocator World- 0.25%

Under the PathFinder income range the charges are:

  • Fidelity Multi Asset Income Fund – 0.87%
  • Fidelity Multi Asset Balanced Income Fund -1.01%
  • Fidelity Multi Asset Income & Growth Fund – 1.02%

What are the performance figures over one, five and 10 years?

1 Year 5 Year 10 Year
Fidelity Allocator World Y-Acc 11.91% 83.74% n/a
Fidelity Multi Asset Open Growth Y Acc 3.91% 36.38% 96.59%
Fidelity Multi Asset Open Strat Y Acc 1.99% 30.57% 70.63%
Fidelity Multi Asset Allocator Growth Y 4.64% 33.83% n/a
Fidelity Multi Asset Allocator Def Y 0.81% 19.08% n/a
Fidelity Multi Asst Allctor Advtrs Y Acc 6.83% 49.55% n/a
Fidelity Multi Asset Allocator Strat Y 2.77% 28.18% n/a
Fidelity Multi Ast Inc Y Accumulation 1.43% 29.72% n/a
Fidelity MAO AD Y-Acc 4.76% 41.51% n/a
Fidelity MAO DF Y-Acc 0.41% 22.43% n/a
Fidelity Multi Asset Bal Inc Y Acc 1.56% n/a n/a
Fidelity Multi Asset Inc & Gro Y Acc 1.83% n/a n/a
Fidelity Open World Y 9.89% 71.12% n/a

What information do you get as an investor?

As well as annual statements and key documents, you can also get expert insight and guidance, including daily articles, videos, webcasts and podcasts. 

Hargreaves Lansdown, Portfolio+

How many funds are in the list?

There are ten different multi-manager funds.

In addition to Portfolio+ they also have SimplyInvest.

Portfolio+ is the closest thing they have to robo investing where you select a portfolio based on objectives and level of risk you want to take. The portfolio is made up of HL multi managers which is rebalanced.

Simply invest is an ultra-low cost tracker combined with tutorials to help first time or less confident investors.

What do you have to do as a beginner investor?

You choose between investing for income or growth and then how much risk you would like to take. HL provides a wide range of research, information and tools to help you decide.

What is the minimum monthly and lump sum investment amounts?

The minimum monthly investment is £25 and the minimum lump sum is £100.

What are the charges?

HL platform charge is 0.45% on the first £250,000, 0.25% on the value between £250,000 and £1m, 0.1% on the value between £1million and £2million and no charge thereafter.

The multi-manager fund charges vary between 1.26% and 1.60% a year.

What are the performance figures over one, five and 10 years?

The multi-manager fund performances are:

1 Year 5 Year 10 Year
HL Multi-Manager Asia & Emerging Markets A Acc -1% n/a n/a
HL Multi-Manager Balanced Managed Trust A Acc 5% 46% 121%
HL Multi-Manager Equity & Bond Trust Acc 1% 32% 96%
HL Multi-Manager European A Acc 6% n/a n/a
HL Multi-Manager High Income A Acc 3% n/a n/a
HL Multi-Manager Income & Growth Trust A Acc 5% 44% 147%
HL Multi-Manager Special Situations Trust Acc 8% 66% 179%
HL Multi-Manager Strategic Assets A Acc 2% n/a n/a
HL Multi-Manager Strategic Bond Trust A Acc 0% 18% n/a
HL Multi-Manager UK Growth A Acc 5% n/a n/a

What information do you get as an investor?

Whenever HL writes an article about the fund they will email investors a link to it. They also do a quarterly update on each fund online.

The Share Centre 

How many funds are in the list?

Between 15 to 18 funds.

What do you have to do as a beginner investor?

The Share Centre has three types of ready-made ISA: cautious, balanced and adventurous. You choose the option which best suits your attitude to risk and investment aim.

What is the minimum monthly and lump sum investment amounts?

The minimum investment is £25 and the minimum top up is £10.

What are the charges?

The ongoing charges figure for investing in The Share Centres’ cautious fund is 1.85%; the balanced fund is 1.69% and the adventurous fund is 1.93%. There are no account administration or dealing charges.

What are the performance figures over one, five and 10 years?

  1 Year 5 Year 10 Year
Cautious 2.18% 33.14% 81.83%
Balanced 5.83% 45.04% 103.57%
Adventurous 8.07% 55.64% 116.16%

What information do you get as an investor?

Monthly commentary regarding the funds’ performance and the managers’ view on markets; quarterly reports with asset holdings, regions invested in and detailed performance ratios. There are a number of videos on their website, which explain the makeup of their multi-managed funds.

Vanguard, LifeStrategy

How many funds are in the list?

There are five funds in the LifeStrategy range. 

What do you have to do as a beginner investor?

You need to select your level of risk with the 20% equity fund being the lowest risk and the 100% equity fund being the highest risk.

What is the minimum monthly and lump sum investment amounts?

The minimum lump sum investment is £500 and the minimum monthly investment is £100.

What are the charges?

The cost of the platform (which covers the cost of having an account and providing the ISA, JISA or General Account wrapper) is 0.15% per year capped on the first £250,000 of investments. This means the maximum platform fee you will pay is £375 per year. The ongoing charges figure is on top of that and the LifeStrategy Range is 0.22% per year. The transaction fees, which come out of the funds for buying and selling the underlying holdings in the LifeStrategy range, are between 0.08% and 0.12%.

What are the performance figures over one, five and 10 years?

Performance figures aren’t available for 10 years:

  1 Year 3 Year 5 Year
Vanguard LifeStrategy 20% Equity Fund 2.32% 5.46% 5.37%
Vanguard LifeStrategy 40% Equity Fund 4.51% 8.50% 7.24%
Vanguard LifeStrategy 60% Equity Fund 7.02% 11.67% 9.11%
Vanguard LifeStrategy 80% Equity Fund 9.49% 14.83% 10.93%
Vanguard LifeStrategy 100% Equity Fund 11.97% 18.06% 12.76%

 What information do you get as an investor?

You will get a pre-sale costs and charges disclosure document, an annual costs and charges report and a statement every three months. If you hold the fund in a General Account you will also receive a consolidated tax voucher after the end of the tax year. In addition to this, you will be able to log on to your accounts at any time for a valuation.

Photo by rawpixel.com from Pexels.

Related articles:

Different types of investment funds

Investment jargon buster; investment terms explained

What is the difference between active and passive investing?

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