The most-popular fund picks among best-buy lists in 2022

Stewart Investors Asia Pacific Leaders Sustainability, LF Majedie UK Equity and Man GLG Japan Core Alpha are among the funds most-recommended by the UK’s largest investment platforms, according to Trustnet research.

Fund recommendation lists can be a useful starting tool for investors unsure of where to put their cash. Most major brokers have a research team that scours the fund and investment trust universes to find the best portfolios for their investors.

In some cases, this can lead them to the same conclusion about which funds are best, with some portfolios recommended across multiple fund shops.

As such, we looked at the lists of five major platforms – Hargreaves Lansdown, AJ Bell, interactive investor, Fidelity and Barclays Smart Investor – to find the funds that are highlighted on three or more.

Of the 323 recommended portfolios across the five lists, no funds appeared on all all five lists or across four. However, 16 funds were included in at least three of the five.

Source: Trustnet

Of the funds on the list, Stewart Investors Asia Pacific Leaders Sustainability is the largest with £7.8bn in assets under management. The portfolio, which appears on the best-buy lists of AJ Bell, Barclays and Fidelity, invests with an eco-friendly mindset, something that has become increasingly popular in recent years.

Despite being an Asia excluding Japan portfolio, the fund can be missed by investors as it sits in the IA Specialist sector.

Analysts at AJ Bell said: “The fund benefits from a well-resourced and knowledgeable team, while the strong adherence of a clearly defined philosophy and investment process is another key advantage.

“However, investors need to be aware that over short-to-medium time periods the fund may deviate heavily from index returns, with the likelihood that it will lag in strongly rising markets but protect in down markets due to its quality biases and focus on capital preservation.”

Of the 16 funds, most have had disappointing years. Five of the 16 have made bottom-quartile returns over the past 12 months, with just one – Man GLG Japan Core Alpha – making in the top quartile of its sector.

Hargreaves Lansdown investment analyst Josef Licsauer noted that its long-term performance has been strong, but that it has struggled in recent years – the fund is bottom-quartile of its sector over three and five years, making 9.2% and 11.1% respectively.

“It can take time for a company’s share price to recover following a disappointment though and shorter-term periods of weaker performance should be expected. That’s been the case in recent years. The team’s investment style has largely been out-of-favour, and value companies performed particularly poorly since the start of 2020 amid the coronavirus crisis,” he said.

“In recent months there have been some signs of recovery, though this is over a short time. We think this fund could work well in a global investment portfolio designed to provide long-term growth, or sit well alongside a Japanese fund using a growth-style investment approach or focused on smaller or medium-sized companies.”

There were two UK funds that appeared on three of the five lists, with LF Majedie UK Equity recommended by Barclays, Fidelity and Hargreaves Lansdown.

Alice Logue, research analyst at Fidelity, said the fund is predominantly invested in FTSE 100 stalwarts, but also had a “dedicated allocation to smaller companies”, making it a good all-round option for investors.

The other was TB Amati UK Smaller Companies, which is backed by AJ Bell, Hargreaves Lansdown and interactive investor. The specialist UK small-cap fund has struggled over the past year, making just 8% – a bottom-quartile performance in the IA UK Smaller Companies sector – but has made top-quartile returns of 334.2% over 10 years.

Analysts at interactive investor said the fund’s managers look for poorly researched companies that may offer good opportunities at attractive share prices, while avoiding businesses with no clear competitive advantage or that already have larger rivals dominating the market.

Several passive funds also made the list. For investors that keep one eye on the price they are paying for their portfolios, iShares Japan Equity Index and iShares Pacific ex Japan Equity Index were the top low-cost options in Asia. Vanguard Global Bond Index was the popular passive bond choice while Fidelity Index World came out as the most-recommended global tracker fund.