Our data shows that there are more than 440 funds in the IMA UK All Companies, IMA UK Equity Income and the IMA UK Smaller Companies sectors.
With this in mind, Ben Willis and Darius McDermott tell FE Trustnet which UK funds they would recommend to people taking their first few steps into the world of investing.
Artemis Income
Ben Willis, head of research at Whitechurch, says first-time investors who want exposure to UK blue chips should turn to Artemis Income.
"Primarily, when looking for a UK fund for a first-time investor you are drawn towards equity income funds," he said.
"There are a number of top-quality funds available, but I would go for Artemis Income."
"It is a multi-billion pound fund that pretty much focuses on large caps – it is a traditional equity income portfolio."
"The managers have a great track record and they have exposure to a range of stocks, but they have a formal contract in place that they don’t hold 15 per cent in any one sector, to limit the portfolio's risk."
"It is a solid fund, which some might find a bit boring," he added.
| Name | Artemis Income |
|---|---|
| Fund Size | £5.2bn |
| Min. Investment | £1,000 |
| OCF | 1.51% |
| Yield | 4% |
| Manager | Adrian Frost & Adrian Gosden |
| FE Crown Rating | 4 Crowns |
Source: FE Analytics
The £5.2bn Artemis Income fund is headed up by the FE Alpha Manager duo of Adrian Frost and Adrian Gosden.
According to FE Analytics, the fund is a top-quartile performer in the IMA UK Equity Income sector over five and 10 years.
Although the fund has beaten both the sector and its benchmark – the FTSE All Share – over one and three years, it is has fallen into the second quartile over these periods.
Over 10 years it has returned 190.7 per cent while its benchmark and the sector have returned 154.38 per cent and 141.48 per cent, respectively.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
Artemis Income – which currently yields 4 per cent – has a much lower annualised volatility than the index and the sector average over the decade.
Old Mutual UK Mid Cap
Willis says that for his mid cap exposure in the UK he would go for Old Mutual UK Mid Cap.
"It used to be run by Ashton Bradbury and is now run by Richard Watts. The fund is primarily top-down first and they try to identify themes or sectors and use the portfolio to reflect their broader outlook," he said.
| Name | Old Mutual UK Mid Cap |
|---|---|
| Fund Size | £1bn |
| Min. Investment | £1,000 |
| OCF | 1.68% |
| Yield | N/A |
| Manager | Richard Watts |
| FE Crown Rating | 3 Crowns |
Source: FE Analytics
The £1bn Old Mutual UK Mid Cap fund is a top-quartile performer in the IMA UK All Companies sector over one, three, five and 10 years.
It was launched in February 2002, although Watts took over the fund in September 2008.
Over this time the fund is a top-quartile performer, with returns of 78.91 per cent, although it only just beat its FTSE 250 ex IT benchmark.
Performance of fund vs sector and index since Sep 2008
Source: FE Analytics
Watts runs a portfolio of 69 holdings and has an overweight position in UK housebuilders, with Barratt Developments and Persimmon among his top-10.
Investec UK Smaller Companies
Willis (pictured) would recommend Investec UK Smaller Companies to investors willing to take on a little more risk.
"It is a fund we invest into, but it is very much investment-process led," he said.
"The fund’s process is to invest in companies with strong cash-flows and balance sheets that are on attractive valuations."
"It is a portfolio of 60 to 80 best ideas. Philip Rodrigs has been there for some time and though he undoubtedly adds value, the strict investment process certainly means the fund is a bit more resilient than others."
| Name | Investec UK Smaller Companies |
|---|---|
| Fund Size | £483.2m |
| Min. Investment | £1,000 |
| OCF | 1.60% |
| Yield | N/A |
| Manager | Philip Rodrigs |
| FE Crown Rating | 5 Crowns |
Source: FE Analytics
FE Alpha Manager Philip Rodrigs has headed up the five crown-rated Investec UK Smaller Companies fund since June 2006.
Performance of fund vs sector and index since June 2006
Source: FE Analytics
Over that time, it is the fourth best-performing IMA UK All Companies fund, with returns of 115.59 per cent.
This is more than triple the returns of its benchmark – the FTSE Small Cap Index – over the period.
It has also been less volatile than the index while Rodrigs has been at the helm.
JOHCM UK Opportunities
Darius McDermott, managing director at Chelsea Financial, says that JOHCM UK Opportunities suits investors looking for a core fund for their general UK exposure.
"It tends to hold large caps, but the manager does dip into the mid cap space," McDermott explained.
"He also looks overseas he if he finds better stocks there. John Wood has the odd period of underperformance, as his fund doesn’t tend to go up as much as the market in a rally."
"However, he is a proven manager with a long-term track record. His fund has low beta and also has an attractive yield," he added.
| Name | JOHCM UK Opportunities |
|---|---|
| Fund Size | £1.1bn |
| Min. Investment | £1,000 |
| TER | 1.29% |
| Yield | 3.04% |
| Manager | John Wood |
| FE Crown Rating | 5 Crowns |
Source: FE Analytics
FE Alpha Manager John Wood has run the five crown-rated JOHCM UK Opportunities fund since its launch in November 2005.
The fund is a top-quartile performer in the IMA UK All Companies sector over this time, with returns of 89.7 per cent. It has beaten the FTSE All Share by 28.54 percentage points in the process.
Performance of fund vs sector and index since Nov 2005
Source: FE Analytics
The fund is also a top-quartile performer over three and five years, but has slightly underperformed against the sector and index during the recent rally.
Marlborough Multi Cap Income
McDermott likes Marlborough Multi Cap Income for investors who want to diversify their income stream away from the usual blue chip dividend-payers.
"It is called Marlborough Multi Cap Income, but in reality it is anything but," he said.
"The fund holds around 10 per cent in large companies and the rest of the portfolio is in small and mid caps."
"With Giles Hargreave, you are getting one of the best managers, with a well-resourced team behind him."
"It is one of only a few UK income funds that looks for yield from different areas of the market," he added.
| Name | Marlborough Multi Cap Income |
|---|---|
| Fund Size | £299.2m |
| Min. Investment | £1,000 |
| OCF | 1.52% |
| Yield | 4.38% |
| Manager | Giles Hargreave & Siddarth Chand Lall |
| FE Crown Rating | N/A |
Source: FE Analytics
Marlborough Multi Cap Income has £299.2m AUM.
It has been co-managed by Siddarth Chand Lall and FE Alpha Manager Giles Hargreave since its launch in July 2011.
The fund has returned 30.51 per cent over this time, while the IMA UK Equity Income sector has returned 19.09 per cent.
Performance of fund vs sector and index since July 2011
Source: FE Analytics
The portfolio comprises 142 holdings and currently has a yield of 4.38 per cent.
Hargreave and Chand Lall count asset managers such as Close Brothers, St James's Place and Polar Capital as top-10 holdings.