Bestinvest reveals latest top-rated funds list to help investors make their ISA and pension choices

With the 5 April end of tax year fast approaching, this is a time of year when the nation’s army of investors will be deliberating which investments to choose in their ISAs and pensions. This is no easy task with many thousands of options available and uncertainty around the outlook weighing on their minds. To support those who prefer to make their own decisions without using an adviser, Bestinvest, the award-winning online investment service powered by leading private client investment group Tilney, has published the latest edition of its Premier Selection of Top Rated funds.

The list comprises funds across a range of investment categories (including shares, bonds and property) and geographic regions, each of which have been selected by Tilney’s research team based on detailed analysis of each fund’s portfolio and process and the track record of the fund manager in charge. In total 83 funds appear on the list which includes both ‘actively managed’ funds, which aim to deliver superior performance than the markets over the longer-run by cherry picking investments, and low cost ‘passive’ funds which are designed to replicate broad market returns by hold a representative basket of investments. The list also includes ethical and sustainable fund ideas, for those investors who want to invest their money with such an approach.

In compiling the list, the team has scoured the fund management industry, with funds selected from 44 different investment companies making the cut. These range from large, well known groups to small, boutique managers who won’t be household names but excel in a particular area of expertise.

Jason Hollands, managing director at Bestinvest, commented: “The difference in returns between the best and worst performing funds is significant and simply cannot be explained by variations in costs alone. The very best managers are worth their weight in gold, but they are a minority, so it is vital to be super-selective when choosing who to entrust your hard earned cash with or alternatively to choose low cost trackers instead. We believe there is a place for blending both approaches.

“Our large research team includes dedicated fund analysts, each of whom focuses on one or two sectors. They are tasked with searching out the very best active managers, as well as low cost ways to track the markets. Of course anyone can look at past performance but that alone is not enough information on which to base a decision as to where to invest for the future, as a manager may have recently changed or a fund with a great past record may have become bloated in size and unlikely to perform as well in the years to come. We dig deeper to get an understanding of how each fund is managed, meeting and grilling the managers.

“Our fund selection process is wholly investment-led. We seek to find the very highest quality managers who have demonstrated that their judgment has added returns after costs. While we will always seek to use our scale as part of one of the UK’s largest private client investment groups to drive down fund costs for the benefit of our clients, we will only ever select active funds on our conviction that the manager can deliver superior returns.

“For example, the Fundsmith Equity, Lindsell Train Global Equity, TB Evenlode Income and Liontrust Special Situations funds, some of our top picks in recent years, have consistently beaten their benchmarks – and by some distance - more than justifying their costs.

“Over the past five years, the FundSmith Equity and Lindsell Train Global Equity funds – both of which invest across the globe, have generated return respectively of 129.1% and 128.9%. These are well ahead of the 67.1% return from the MSCI World Index of global stock markets.

“Likewise, while the UK stock market, as measured by the MSCI United Kingdom All Cap Index, has eked out a five-year total return of just 20.7%, UK equity funds TB Evenlode Income and Liontrust Special Situations have surged by 58.9% and 53.5% over this time.

“It is important to understand that once invested, it is absolutely vital to monitor funds you hold closely as circumstances can change. At Bestinvest when this happens, for example because a key member of the team leaves, we will always re-evaluate whether the fund should stay on our list. We keep clients fully informed if our views change so that they can make their own decision as to whether they wish to stay invest or switch elsewhere.”

For a copy of Bestinvest’s Top-Rated Funds Guide, please contact katy.moore@tilney.co.uk