Our Top 100 Funds has been running for seven years now, and is one of the most popular features that we publish. Our Top 50 ETFs, which followed a year or so later to reflect the rise of passive investment, is similarly well-read. It’s easy to understand why. There are more than 2,600 managed funds available to private investors in the UK, along with a further 300-odd investment trusts and Reits, and an ever-expanding pool of ETFs – 1,500 and counting. The idea of our lists was to simplify what would otherwise be a quite bewildering choice to help readers pick out the best ones and avoid (mostly) the many duds.
Indeed, many funds continue to charge very high fees for mediocre performance – even those being pushed by some well-known wealth managers. When we started the list, fund literature and charging was not consistent or always especially transparent – a situation that has only partially improved even today, as the controversial launch of key information documents has shown. Finally, our list is independent, which means fund managers can’t buy a place on it.
Therein lies the big difference between what we do and what some platforms, most notably Hargreaves Lansdown, have been criticised for – that their lists are put together for commercial reasons, which encourages them to promote funds not because they are good but because they are easy to market and highly lucrative for the platform, like Woodford Income, whose inclusion had raised heckles even before this year’s troubles. Terry Smith has been a particularly vocal critic, famously accusing Hargreaves of dropping Fundsmith from its list because he refused to discount the charges on the fund (although whether its charges are too high for a fund that is growing too big is a question for another day). It’s also noteworthy that Hargreaves’ list includes no investment trusts – our Top 100 funds has always been split roughly evenly.
Even 100 funds is still a lot to choose from, as more than 30 pages devoted to the feature demonstrates. It is not a shopping list, though, or even a menu: some effort on the part of the reader to determine which funds will be best suited to their own portfolios is still required, not least to choose the most appropriate mix of bonds, shares and other assets to reflect one’s risk appetite. And that’s a recipe every individual must work out for themselves.
