What are the funds that are most recommended to self-directed investors by DIY investment platforms? Following up on research we did last year, we have trawled through hundreds of fund recommendations from five platforms: Bestinvest, Charles Stanley Direct, Fidelity, Hargreaves Lansdown and The Share Centre, to find out.
Three funds - recommended by all five platforms - came out on top. One is a UK equity income fund, one a UK all companies fund and the other an Asia equity fund.
Two of the funds, AXA Framlington UK Select Opportunities and Stewart Investors Asia Pacific Leaders, were also recommended by all five platforms in 2014 and have therefore retained their top spots.
The other, Artemis Income, had previously been recommended by four out of five platforms, but is now backed by all five following a recommendation by Bestinvest.
However, M&G Optimal Income, which was given five recommendations in 2014, has slipped down the list after losing Charles Stanley's backing. The platform stopped recommending the fund in June saying it is "more susceptible than many of its peers to a change in sentiment towards bonds".
Below are the details of the three most recommended funds, together with what we viewed as the most useful commentary from the websites of the platforms that endorse them.
Artemis Income (GB0032567926)
The fund aims to produce a rising income with capital growth from a portfolio primarily made up of investments in the UK including ordinary shares, convertibles and fixed-interest securities. The fund has discretion in its choice of investments, however, and is not restricted by the size of the company or the industry it trades in. It is co-managed by Adrian Gosden and Adrian Frost.
Bestinvest says: "This is a core fund for equity income investors managed by two experienced investors. The fund's success has led to a higher level of assets under management, meaning there is now a greater focus on larger companies at the expense of small- and mid-cap stocks. As a result, returns have moderated in recent years, but this also makes the fund a more cautious option in the peer group."
Charles Stanley says: "The managers are pragmatic in their approach, adapting their investment style to suit market conditions. The fund has protected its capital better in falling markets than its peers, leading to strong overall long-term returns. Historically, stability is a key attraction of this fund, both in terms of the team and the implementation of the investment strategy."
Fidelity says: "We like the fact that these are two very experienced managers who adopt a particularly robust process. The managers use traditional fundamental analysis to determine the likely direction, volatility and sustainability of a company's cash flow. They also make judgements as to whether management will allocate capital wisely, asking: are they competent 'stewards' of this cash?"
Hargreaves says: "We rate Adrian Frost and Adrian Gosden highly. They have significant experience managing equity income funds and a long history of outperforming. Their approach has been consistent throughout and a focus on cash-generative companies with the ability to reliably increase dividends has served them well."
AXA Framlington UK Select Opportunities (GB0003501581)
The fund seeks to achieve capital growth by investing in companies, primarily of UK origin, where the fund manager, Nigel Thomas, believes above-average returns can be realised.
Bestinvest says: "Nigel Thomas has been managing money for over three decades and during that time has built one of the strongest track records in the UK All Companies sector. A pragmatic approach to selecting growth opportunities combined with an instinct for value sets him apart. Despite the fund's now substantial size we believe this approach can continue to add value - although the weight to FTSE 100 companies has increased, the portfolio is still typically overweight mid-cap stocks."
Charles Stanley says: "Nigel Thomas has long adopted a flexible approach to fund management. He pays no regard to any benchmark index and invests across the whole market from small companies to FTSE 100 heavyweights. His style therefore has the scope to perform irrespective of the prevailing market conditions."
Fidelity says: "We find the lead manager's considerable investment experience compelling, as well as the broader team's depth of knowledge of UK companies and their management. Idea generation is enhanced by strong communication with sector specialists who provide investment insights into key sectors such as biotechnology, healthcare, technology, energy and real estate."
The Share Centre says: "The fund offers diversification via a multi-cap approach with a focus on smaller- and medium-sized companies. The manager tends to maintain a core of roughly up to one-third in large companies that fall within the FTSE 100, with the remainder selected from the mid- and small-cap arena. Stock selection can comprise a mixture of opportunities that may arise due to circumstances such as recovery, growth, value, consolidation or even due to a complete management change, the introduction of new products, or technological change. This fund may suit investors seeking truly diversified multi-cap UK exposure."
Stewart Investors Asia Pacific Leaders (GB0033874214) (previously First State Asia Pacific Leaders)
This fund, which is an IC Top 100 Fund, aims to achieve long-term capital growth by investing in large- and mid-cap equities in the Asia Pacific region (excluding Japan, including Australasia). It follows a bottom-up process to seek out good-quality companies across the region.
Bestinvest says: "This fund is run by Angus Tulloch, a highly experienced manager, with an absolute-return objective in mind. He tends to be bearish and believes attempts to time market investment to be folly. Consequently, he likes to play it safe with his investors' money, investing in large companies with sustainable cash flows and robust balance sheets. Prioritising capital preservation higher than most of his peers, the manager tends to outperform in falling markets, but lag when they rise strongly."
However, Mr Tulloch, who has spent 27 years running Asian mandates - the longest of any manager investing in the region - will be stepping down as manager of the fund in July 2016. He will remain at Stewart Investments, but will hand the £7.5bn fund over to managers David Gait and Sashi Reddy.
Charles Stanley says: "This change is part of a host of alterations to responsibilities across Stewart Investors' Global Emerging Markets and Asian funds, although the overall management culture, philosophy and investment process across all the funds involved will remain the same. Mr Tulloch will remain part of the team and retain co-management responsibility for the Stewart Investors Asia Pacific Fund (currently closed to new investment) alongside Ashish Swarup.
"There are a significant number of fund manager changes to digest, but having spoken to members of the team we are reassured that the collegiate approach and consistently applied investment process across all of First State Stewart's funds should ensure investors are well served going forward.
"We believe Davis Gait and Sashi Reddy are appropriate individuals to replace Mr Tulloch. The pair already manage the Stewart Investors Asia Pacific Sustainability Fund, which has a nearly 50 per cent commonality of holdings with Asia Pacific Leaders, the main difference being that it isn't exclusively invested in larger companies."
Hargreaves Lansdown is also unconcerned by the change in management.
Hargreaves says: "David Gait, the fund's existing co-manager, will take over lead responsibility [from Angus Tulloch], while Sashi Reddy will be appointed as co-manager. David Gait is an experienced investor in his own right, having joined Stewart Investors' Asian and emerging markets team in 1997.
"We are also encouraged that Angus Tulloch, one of the team's longest-standing members, will remain part of the team and act as a vital resource for the remaining managers. The fund's existing philosophy and investment process will also be maintained, which we view positively.
"We hold the Asia and emerging markets team at Stewart Investors in high regard, and we continue to believe the fund represents an exceptional choice for core exposure to the region."
Fidelity says: "The long-term focus of the well-established First State team makes this fund stand out from many others in the peer group. The relatively concentrated nature of the portfolio is balanced by the team's focus on quality."
FUND PLATFORM SELECT LISTS USED FOR THE RESEARCH
Bestinvest - Premier Selection (5 star ratings): https://select.bestinvest.co.uk/premier-selection
Charles Stanley Direct - Foundation Fund List: https://www.charles-stanley-direct.co.uk/Foundation_Fundlist
Fidelity Personal Investing - The Select List: https://www.fidelity.co.uk/investor/funds/find-funds/select-list/default.page
Hargreaves Lansdown - Wealth 150: http://www.hl.co.uk/funds/wealth-150
The Share Centre - Platinum 120: https://www.share.com/find-investments/funds/platinum-120-funds/platinum-120-funds-list/
Funds most recommended by DIY investment platforms
| Fund | ISIN number | Category | The Share Centre recommendation | Best Invest Recommendation | Charles Stanley Recommendation | Fidelity recommendation | Hargreaves Lansdown recommendation | Total Recommendations |
|---|---|---|---|---|---|---|---|---|
| Artemis Income | GB0032567926 | IA UK Equity Income | Y | Y | Y | Y | Y | 5 |
| AXA Framlington UK Select Opportunities | GB0003501581 | IA UK All Companies | Y | Y | Y | Y | Y | 5 |
| Stewart Investors Asia Pacific Leaders | GB0033874214 | IA Asia Pacific Excluding Japan | Y | Y | Y | Y | Y | 5 |
| BlackRock Gold And General | GB00B5ZNJ896 | IA Specialist | Y | Y | Y | Y | 4 | |
| CF Woodford Equity Income | GB00BLRZQ513 | IA UK Equity Income | Y | Y | Y | Y | 4 | |
| Henderson Strategic Bond | GB0007533820 | IA Sterling Strategic Bond | Y | Y | Y | Y | 4 | |
| JOHCM UK Equity Income | GB00B03KR500 | IA UK Equity Income | Y | Y | Y | Y | 4 | |
| JPMorgan Emerging Markets Income | GB00B5T0GN09 | IA Global Emerging Markets | Y | Y | Y | Y | 4 | |
| Liontrust Special Situations Fund | GB00B0N6YF70 | IA UK All Companies | Y | Y | Y | Y | 4 | |
| M&G Optimal Income Fund | GB00B7FM9R94 | IA Sterling Strategic Bond | Y | Y | Y | Y | 4 | |
| M&G Strategic Corporate Bond Fund | GB00B7J4YT87 | IA Sterling Corporate Bond | Y | Y | Y | Y | 4 | |
| Marlborough Special Situations Fund | GB00B907GH23 | IA UK Smaller Companies | Y | Y | Y | Y | 4 | |
| Old Mutual UK Smaller Companies Fund | GB00B1XG7C26 | IA UK Smaller Companies | Y | Y | Y | Y | 4 | |
| Schroder Tokyo Fund | GB00BGP6BR86 | IA Japan | Y | Y | Y | Y | 4 | |
| Standard Life Investments UK Equity Income Unconstrained Retail | GB00B1LBSR16 | IA UK Equity Income | Y | Y | Y | Y | 4 | |
| Artemis Strategic Assets Fund | GB00B3VDD431 | IA Flexible Investment | Y | Y | Y | 3 | ||
| BlackRock Continental European Fund Class | GB00B3S9LG25 | IA Europe Excluding UK | Y | Y | Y | 3 | ||
| Fidelity Index UK Fund | GB0003875324 | IA UK All Companies | Y | Y | Y | 3 | ||
| Fidelity South East Asia Fund | GB00B6Y7NF43 | IA Asia Pacific Excluding Japan | Y | Y | Y | 3 | ||
| First State Global Listed Infrastructure Fund | GB00B24HJL45 | IA Global | Y | Y | Y | 3 | ||
| First State Global Resources Fund | GB0033737767 | IA Global | Y | Y | Y | 3 | ||
| FP Argonaut European Alpha Fund | GB00B7MW8T72 | IA Europe Excluding UK | Y | Y | Y | 3 | ||
| FP CRUX European Special Situations Fund | GB00BTJRPW12 | IA Europe Excluding UK | Y | Y | Y | 3 | ||
| Invesco Perpetual Tactical Bond | GB00B4V74V60 | IA Sterling Strategic Bond | Y | Y | Y | 3 | ||
| Investec Emerging Markets Local Currency Debt Fund | GB00B1XDJP05 | IA Global Emerging Market Bond | Y | Y | Y | 3 | ||
| JOHCM Japan Fund GBP | IE0034388797 | IA Japan | Y | Y | Y | 3 | ||
| Jupiter European Income | GB00B1VV2H94 | IA Europe Excluding UK | Y | Y | Y | 3 | ||
| Kames Ethical Equity Fund | GB00B8HVNR99 | IA UK All Companies | Y | Y | Y | 3 | ||
| Legg Mason IF Royce US Smaller Companies Fund | GB0034100932 | IA North American Smaller Companies | Y | Y | Y | 3 | ||
| Man GLG Japan CoreAlpha Fund | GB00B0119933 | IA Japan | Y | Y | Y | 3 | ||
| Marlborough UK Micro-Cap Growth Fund | GB00B8F8YX59 | IA UK Smaller Companies | Y | Y | Y | 3 | ||
| Newton Global Income | GB00B0MY6Y52 | IA Global Equity Income | Y | Y | Y | 3 | ||
| Newton Real Return Fund | GB0001642635 | IA Targeted Absolute Return | Y | Y | Y | 3 | ||
| Threadneedle European Select Fund | GB0001529345 | IA Europe Excluding UK | Y | Y | Y | 3 |
Source: Investors Chronicle, as at 2 December 2015
