The same is true of investment trusts, whose higher volatility makes them even better suited to this type of investing.
With this in mind, FE Trustnet asked the experts which trusts they would recommend for a monthly savings plan.
Charles Cade (pictured), investment trust analyst at Numis Securities, says investors who are looking to drip-feed their savings into a trust should turn to a more diversified portfolio to negate the effects of market timing.
"You don’t want to be too specific where the asset class or discount would move dramatically, which might be better suited to a lump-sum investment," he said.
"You want it to be relatively stable so you don’t have to worry about where the market is."
Cade recommends the Witan Investment Trust and the Foreign & Colonial Investment Trust as good options for monthly savers.
Witan IT
This globally focused trust is spread across a range of regions and sectors, with its highest weighting – at 43.5 per cent – to UK equities.
The remainder of the portfolio is split between North America, Europe and Asia, which Cade says makes it less susceptible to market moves in one region.
Additionally, the trust has exposure to areas of the market as varied as consumer products, healthcare, and oil and gas, among other sectors.
Investors can access the fund for £50 a month or £100 through their ISA.
Witan IT has consistently outperformed the FTSE All Share over one, three, five and 10 years.
Over the last decade it has made 203.41 per cent while the index has gained 164.22 per cent, according to FE Analytics.
Performance of trust vs index over 10yrs
Source: FE Analytics
Investors who put in a £1,000 initial investment and topped this up with £100 a month would have seen a total return of £20,013.61 – a gain of £7,013.61 on their total investment.
According to the AIC, the trust is trading on a discount of 9.2 per cent and is geared at 8 per cent. It is currently yielding 2.3 per cent.
The trust has ongoing charges of 1.07 per cent, including the performance fee.
Foreign & Colonial IT
Another globally oriented portfolio that Cade says is ideal for monthly savers is the Foreign & Colonial Investment Trust, run by F&C.
The manager, Jeremy Tigue, is head of the global and US equity team at the fund house.
The highest weighting in the trust is to North America, at 24.6 per cent. UK equities make up nearly as much of the portfolio, at 21.7 per cent.
Among the trust’s top holdings are blue chip UK names such as BP, GlaxoSmithKline and Royal Dutch Shell.
Investors can access the trust for a lump sum minimum investment of £500 or £50 a month.
The trust has significantly outperformed its benchmark – which is split between the FTSE All Share and FTSE All World Europe ex UK indices – over one, three, five and 10 years.
Over the last decade, the trust has made 137.35 per cent while its benchmark is up 97.81 per cent.
Performance of trust vs benchmark over 10yrs
Source: FE Analytics
Investors who put in £1,000 and then invested £100 a month over the next 10 years would have made a total of £6,477.59 on top of their £13,000 total investment.
The fund is trading on a discount of 10 per cent with 12 per cent gearing. It is currently yielding 2.5 per cent, according to the AIC.
It has ongoing charges of 0.57 per cent and no performance fee.
"[The trust] continues to evolve as it attempts to deliver a more retail investor-friendly approach," said Winterflood’s Simon Elliott.
"The announcement that it was looking to increase its dividend last year is now supported by the higher yield generated by its global equity income sub-portfolio."
"Coupled with the expiry of the fund’s expensive long-term debenture in 2014 and the cash generated by the private equity portfolio, we would expect the fund to be able to materially increase its dividend over the next few years."
"This should increase its attractiveness to retail investors which already account for a substantial proportion of the fund’s shareholder base, largely through F&C’s own savings schemes."
Scottish Mortgage Investment Trust
Winterflood’s Innes Uruquhart says this is another global investment trust that is well-suited to monthly savers.
"This fund is managed by James Anderson and Tom Slater of Baillie Gifford’s long-term growth team and has performed very well over the last few years through investing in a portfolio of global equities," he said.
"However, we would expect the fund to be more volatile than some of its peers and the growth approach will lead to periods of underperformance, particularly in weaker market conditions."
"This was evidenced in 2008 when it was hit hard by the market sell-off. However, performance has since recovered and we believe that it is an attractive long-term growth vehicle for investors who are comfortable with a higher degree of volatility."
It is available for a lump sum investment of £250 or £30 a month.
Scottish Mortgage Investment Trust has beaten the FTSE All World index over one, three, five and 10 years, returning 246.4 per cent over the longer period while the index has made just 100.6 per cent.
Performance of trust vs index over 10yrs
Source: FE Analytics
Like the Foreign & Colonial IT, Scottish Mortgage is tilted to North America. Its second-highest weighting is to Europe.
Among the trust’s top holdings are internet blue chips Amazon and Google.
According to the AIC, the trust is trading on a discount of 4 per cent, with 16 per cent gearing. It has a yield of 1.7 per cent and ongoing charges of just 0.51 per cent.