Best Investment Funds UK 2020

If you’re keen to invest in the financial markets but lack the know-how to place trades yourself – you might want to consider an investment fund.

In doing so, your chosen fund will determine which assets to buy and sell, meaning that you can enjoy a passive stream of income. Investment funds come in a verity of different forms – from ETFs and mutual funds to investment trusts and index funds.

In this guide, we discuss the best investment funds available to UK residents in 2020. We cover a variety of fund types – and walk you through the process of making an investment from the comfort of your home.

Top 8 Investment Funds in the UK

Below you will find a quick snapshot of the best investment funds in the UK that made our cut. You will find more information on each fund by scrolling down.

  1. iShares Russell 1000 ETF – Invest in over 800+ Undervalued US Stocks – Invest Now
  2. SPDR Gold ETF – Invest in Gold Commission-Free Without Worrying About Storage – Invest Now
  3. MI Chelverton UK Equity Growth Fund – Best Investment Fund to Invest in Small UK Stocks – Invest Now
  4. S&P 500 Index – The De-Facto Investment Fund for Long-Term Wealth Building – Invest Now
  5. iShares MSCI Hong Kong ETF – Invest in a Basket of Hong Kong Companies – Invest Now
  6. iShares FTSE China 25 Index ETF – Invest in the Best Chinese Stocks and Shares – Invest Now
  7. BMO Responsible UK Income 2 Inc – Best Ethical Fund for Investing in UK Companies – Invest Now
  8. Vanguard Pension Investment Fund – Choose Your Target Retirement Date- Invest Now

Overall Best Investment Funds UK

On the one hand, it is great that UK investors have thousands of top investment funds to choose from. After all, this ensures that there is a fund to suit all investor types. However, this can make it extremely challenging when it comes to separating the wheat from the chaff.

With this in mind, below you will find our overall best investment funds available in the UK.

iShares Russell 1000 ETF – Invest in over 800+ Undervalued US Stocks

The iShares Russell 1000 ETF is a great option if you seek to gain exposure to the US economy. In fact, this particular investment fund will give you instant access to 843 individual stocks. This means that you will have a huge portfolio of shares in return for making a single investment.

iShares Russell 1000 ETF

The iShares investment fund manager seeks to select US firms that it believes are undervalued. This covers both large and mid-cap stocks from every sector going. In terms of major players, the investment fund is currently holding 2.76% in Berkshire Hathaway and 2.27% in Johnson and Johnson. Then you have the likes of Walt Disney, Intel, Verizon, and JPMorgan Chase & Co.

Although this particular investment fund is US-based and focused entirely on American companies – investing from the UK couldn’t be easier. In fact, when using FCA-regulated broker eToro you can invest without paying a single penny in commission, dealing charges, or ongoing fees. Additionally, the aforementioned platform requires a minimum investment of just $50 – which is about £40-ish.

75% of retail investor accounts lose money when trading CFDs with this provider

SPDR Gold ETF – Invest in Gold Commission-Free Without Worrying About Storage

As the name suggests, this investment fund is focused exclusively on gold. This store of value could be worth considering if you foresee tough economic conditions ahead. After all, investors will often flock to assets like gold when market uncertainties are on the rise. This is evident of how well gold has performed this year.

SPDR Gold ETF

In fact, the SPDR Gold ETF is up 25.99% from the 12 months prior to writing this page. This investment fund is also super-easy to back – as you simply need to meet a $50 minimum at eToro. In doing so, you will be investing in the future value of gold without needing to worry about storage or delivery.

Instead, the ETF provider – SPDR, is physically-backed by the asset – so you can invest with ease. Going the ETF route will also result in super cost-effective fees. Once again, you won’t pay any commissions or ongoing charges when using a broker like eToro, and you can exit your position at any given time.

75% of retail investor accounts lose money when trading CFDs with this provider

Best Mutual Investment Funds UK

Our top two selections listed above both come in the form of ETFs. This means that the provider is tasked with tracking a specific marketplace – such as the Russell 1000 or gold. Mutual funds, on the other, are slightly different. This is because the fund manager will personally decide which assets to buy and sell – and when.

In other words, although it might be focused on FTSE 100 stocks, it might decide to remove a number of constituents if it believes the company does not add value to investors. This is something that ETFs cannot do. Nevertheless, below you will find our top-rated UK mutual investment funds.

MI Chelverton UK Equity Growth Fund – Best Investment Fund to Invest in Small UK Stocks

While most investors focus on large-cap stocks listed on the London Stock Exchange, some look to gain exposure to up and coming firms. Such companies will typically be found on the Alternative Investment Market (AIM) – which is the UK’s secondary stock exchange.

This particular marketplace carries a much higher risk/reward ratio in comparison to established blue-chip stocks, as many AIM-listed firms are yet to truly prove their business model. Or, they might be established but simply possess a small market valuation. Either way, if you do want to allocate some of your capital to small UK companies – then this is best left to a mutual fund like the MI Chelverton UK Equity Growth Fund.

MI Chelverton UK Equity Growth Fund

After all, the investment fund in question will personally determine which UK stocks are worth backing, and which aren’t. The experienced fund manager will also determine when the right time is to buy or sell. The MI Chelverton UK Equity Growth Fund consists of was first launched in 2014 and had just over £722 million in assets as of August 2020.

Led by James Baker and Edward Booth, its portfolio contains 127 individual stocks. This comes from a variety of sectors – with a lot of focus on technology, healthcare, support services, and consumer goods. Some of its top holdings include Future, Clingen, SDL, Premier Foods, Gamesys, and dotDigital.

Other leading UK mutual investment funds to consider are:

  • Blackrock UK Fund: This mutual investment fund focuses on large-cap UK stocks. This might be more suitable if you wish to take less risk – as the fund consists of established firms with larger market valuations.
  • ASI Global Smaller Companies: This is another mutual investment fund that targets up and coming UK stocks. The fund has performed well since its inception so it might be worth diversifying between this fund with that of the MI Chelverton UK Equity Growth to balance out your risk levels.

Your capital is at risk

Best Investment Funds for Beginners

Arguably all UK investment funds are suited for beginners, as you won’t be required to do any of the legwork. Instead, the process of buying and selling assets is left to the fund provider.

With that said, certain investment funds are more suited for newbies, as they hold assets that are easy to understand. This will typically focus on major stocks and shares that have a long-standing track record and that are behind brands you likely know well.

S&P 500 Index – The De-Facto Investment Fund for Long-Term Wealth Building 

Even if you’ve never placed a single trade before, there is every chance that you have heard of the S&P 500. For those unaware, the S&P 500 is a US-focused stock market index. It tracks the performance of 500 large US companies – from both the NYSE and NASDAQ. This includes the likes of IBM, Google, Twitter, Disney, Berkshire Haway, Verizon, Apple, Amazon, and many more.

Since it was launched in 1926, the S&P 500 Index has returned an average of just over 10% per year – weighted out over the course of time. The key point is that the index will be rebalanced regularly to ensure it reflects the wider US stock markets. In order to do this, the S&P 500 will focus on market capitalisation.

Vanguard S&P 500 ETF

That is to say, the largest US stocks in terms of market value will contribute a larger percentage to the index. In terms of gaining exposure, there are plenty of investment funds in the UK that track the S&P 500. In our view, the easiest and most cost-effective way of doing this is through an ETF.  At the forefront of this is Vanguard – which has its S&P 500 ETF hosted at eToro.

This means that you can invest from just $50, and you will not pay any fees or commissions. We should also note that – like most ETFs, the Vanguard option still allows you to earn dividends. In fact, this will be distributed every three months into your brokerage account. By reinvesting these dividends back into the S&P 500 index, you stand the chance of growing your money faster.

To ensure you are able to find an S&P 500 investment fund that meets your needs, below you will find some other options:

  • iShares Core S&P 500 ETF
  • SPDY S&P 500 ETF
  • Portfolio Plus S&P 500 ETF

75% of retail investor accounts lose money when trading CFDs with this provider

Best Exchange Traded Investment Funds

We’ve already discussed a number of the best investment funds that come in the form of ETFs. To recap – this includes the Vanguard S&P 500 Index, SPDR Gold ETF, and iShares Russell 1000 ETF. However, there are many other ETF investment funds that are worth considering.

This includes:

iShares MSCI Hong Kong ETF – Invest in a Basket of Hong Kong Companies

If you’re the type of investor that wants to gain access to the ever-growing Asian economies, it might be worth considering the iShares MSCI Hong Kong ETF. As the name implies, this investment fund focuses on the Hong Kong markets. In particular, the fund contains 41 individual shares that are listed on the Hong Kong stock exchange.

iShares MSCI Hong Kong ETF

Although the portfolio is reasonably weighted, two companies collectively make up just over 36%. This consists of AIA Group (23.95%) and Hong Kong Exchanges and Clearing (12.14%).

After that, you have the likes of Sun Hung Kai Properties, Techtronic Industries, and CK Hutchinson. Crucially, this ETF once again highlights just how easy it is to invest in international companies from the comfort of your home. After all, you simply need to meet a $50 minimum and that’s it – you’ll have a basket of 41 Hong Kong firms!

75% of retail investor accounts lose money when trading CFDs with this provider

iShares FTSE China 25 Index ETF – Invest in the Best Chinese Stocks and Shares

An additional overseas ETF to consider is that of the China 25 Index. Backed by heavyweight fund provider iShares, this will get you access to 25 large-scale Chinse companies.

iShares FTSE China 25 Index ETF

This includes the likes of Tencent Holdings, Meituan Dianping, China Construction Bank, Alibaba, and China Mobile. As one of the fastest and most-powerful economies globally – this investment fund is well worth keeping an eye on.

75% of retail investor accounts lose money when trading CFDs with this provider

Best Ethical Investment Funds UK

By investing in this type of investment fund, there will be certain ethical codes in play. At one of the end spectrum, this might be a case of avoiding certain industries and sectors – like gambling, alcohol, tobacco, or defence.

In some cases, an ethical investment fund will focus purely on companies that are involved in socially beneficial areas. For example, this might include a firm that is looking to develop clean energy.

Nevertheless, below you will find our top-rated UK ethical investment funds.

BMO Responsible UK Income 2 Inc – Best Ethical Fund for Investing in Small-to-Medium UK Companies

This ethical investment fund is a UK-based option that focuses on British stocks. The key point with this fund is that each stock must not only meet a range of ethical considerations, but they must carry a small-to-medium market cap. In terms of performance, the fund has outperformed the wider FTSE All-Share index in 4 out of the past 5 years.

BMO Responsible UK Income 2 Inc

When going direct with this fund provider, you’ll need to invest at least £500,000. As such, you are best advised to go through a third-party broker. For example, Hargreaves Lansdown requires just £100, or a minimum direct debit or £25 per month. In terms of fees, this fund will cost you 0.91% per year.

Jupiter Responsible Income – Invest in Large UK Shares That are Actively Managing Social Responsibilities 

This investment fund focuses on companies that are actively managing their social and environmental issues. The portfolio contains 45 stocks in total – with the likes of GlaxoSmithKline, RELX, Vodaphone, Teso, and Aviva leading the way.

Once again, going through Hargreaves Lansdown will require a minimum lump sum of just £100 or £25 per month. The ongoing charge is 0.93% with no upfront fee.

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Best ISA Investment Funds

When you open an account with an online stock broker that offers ISAs – you will be able to invest up to £20,000 without paying any capital gains or dividend tax. Your annual allowance will reset once the 2021/22 tax year kicks in – with a further £20,000 on offer.

In terms of what you can invest in, most asses classes are eligible. This includes all investment fund types – such as ETFs, index funds, mutual funds, and investment trusts. Additionally, stocks, bonds, and cash are also included. The most important thing is that you choose an investment platform that not only offers ISAs – but your chosen fund.

Some of the best ISA brokers in the UK include Hargreaves Lansdown and IG. Both of these platforms offer thousands of ISA-eligible funds, and fees are reasonable.

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Best UK Pension Investment Funds

Some of the best investment funds are tailored to those of you that want to build a pot for your retirement years. In fact, there are hundreds of options in the market – most of which will take a sliding risk approach. In simple terms, this means that the provider will decrease the amount of risk taken as you get closer to your retirement age.

In most cases, you’ll find that your portfolio will focus on stocks, with a small allocation of bonds. As the years go on, the focus on high-grade bonds will increase to ensure the risks are reduced. In terms of the best pension investment funds available to UK investors – you might want to explore what Vanguard has to offer.

Vanguard Pension Investment Fund – Choose Your Target Retirement Date

Vanguard offers a variety of pension fund options – all of which centre on a target retirement date. At the time of writing, this runs from 2025 to 2065 – in increments of 5 years. For example, let’s say that you plan to retire in 2035 – which is 15 years away. By opting for Vanguard, the fund provider will hold 69% in stocks and 30% in bonds.

Vanguard Retirement Fund Timeframes

Then, 5 years later, Vanguard will rebalance your portfolio so that it contains a stock/bond split of 64%/36%.  If you like the sound of Vanguard for your pension investment fund needs, you can get started with a lump sum injection of £500 or more. You can also elect to set up a direct debit, as long as you meet a £100 minimum.

Your capital is at risk.

What Are Investment Funds UK?

Investment funds allow you to inject money into the financial markets in a passive nature. You don’t need to have any experience or knowledge of how the markets work – as the fund manager will take care of all investment-related decisions. That is to say, your chosen investment fund will buy and sell stocks, bonds, and other assets on your behalf.

This particular investment scene actually covers several asset classes. For example, investment funds can refer to ETFs, mutual funds, investment trusts, or index funds. The key point is that each of the aforementioned fund types allows you to gain exposure to a full basket of assets through a single trade.

What are investment funds?

For example, let’s suppose that you invest in a fund that focuses on small UK companies. By investing just a few hundred pounds, your portfolio might consist of 200+ small-call firms listed on the AIM. Similarly, by investing in a fund that tracks the FTSE 100, you’ll be purchasing a basket of 100 large-cap UK stocks.

In terms of the fundamentals, investment funds are run and managed by large-scale financial institutions. Some of the biggest players in the space include iShares, SDPR, and Vanguard. Your money will be pooled together with thousands of other investors – meaning that the fund will often have billions of pounds under management.

How do Investment Funds Work?

Whether you opt for an ETF, mutual fund, or trust – the investment process is largely the same. To help clear the mist, let’s look at a quick example of how the best investment funds work.

  • You invest £10,000 into an investment mutual fund
  • The fund manager focuses on large-scale UK stocks
  • In total, the investment fund purchases shares in 150 companies listed on the London Stock Exchange
  • In theory, you will own a small proportion of each stock purchased by the fund – based on the amount you invested
  • For example, if the fund has 4% of its portfolio in HSBC, your £10,000 investment will consist of £400 worth of HSBC shares

When it comes to making money, most UK investment funds pay dividends. This will be a share of any stock dividends or bond coupon payments that the fund has received on behalf of its investors. Your share will typically be distributed every 3 months, albeit, some funds payout every 6 or 12 months.

On top of regular dividends, you can also grow your money if the net asset value (NAV) of the investment fund goes up. This will occur if the assets held by the fund increase in the open market place. For example, if you invest in a FTSE 100 fund and the value of the index increases by 10%, then you should expect your fund investment to increase by a similar margin.

Types of Investment Funds

As we discussed above, there are many types of investment funds. Most operate in the same way, insofar that you will get to invest in a basket of assets in a passive manner. The fund will make asset purchases on behalf of its investors, and determine the right time to sell.

With that said, there are some slight differences between each investment fund type, which we list below:

  • Mutual Funds: This type of investment fund will determine which assets to buy and when. The fund manager has the flexibility to choose which assets to invest in, as they are not tied to a specific market. As this fund type is actively managed, the fees are slightly higher than ETFs.
  • ETFs: This investment fund will track a specific marketplace. For example, if the objective of the ETF was to track the NASDAQ 100, it will look to replicate the NASDAQ exchange like-for-like. ETFs are often the most cost-effective option as they are passively managed.
  • Investment Trusts: Trusts are similar to mutual funds. This is because your capital will be actively managed by the fund – insofar that they will make all investment decisions. Trusts are not tied to a specific market, which comes with greater flexibility.
  • Index Fund: As the name suggests, index funds will track a specific stock market index like the FTSE 100 or Doe Jones. The fund will buy shares in all companies that make up the index at the same weighting system.

Investment Trusts vs Funds

Investment trusts are one branch of the wider investment fund spectrum. They are popular in the UK, as over the past decade trusts have generally outperformed mutual funds.

One of the main differences between trusts and funds is that the former has the capacity to borrow money. Known as ‘gearing’, this gives the trust much more in the way of purchasing power. In turn, they can trade with much more than they have in working capital.

Benefits of Investing in Top Investment Funds

There are many benefits to choosing an investment fund over traditional stocks or bonds.

This includes:

  • No Experience Needed: The process of picking shares or bonds can be challenging. After all, you need to have a good understanding of technical and fundamental research and be able to read and interpret company reports. This is why so many newbies opt for UK investment funds, as you don’t need to have any knowledge of how the financial markets work.
  • Passive Income Steam: Once you inject money into an investment fund, you can sit back and allow the provider to buy and sell assets on your behalf. This is great for earning passive income, as you will likely receive a dividend payment every three months.
  • Low Investment Amount: You can now invest in funds with a small amount of capital. In most cases, you can get started with just a couple of hundred pounds. eToro goes one step further by allowing you to invest in ETFs from just $50 (about £40) while Hargreaves Lansdown stands at £100. Even if your chosen investment fund requires a large amount of capital, you can simply bypass this by going through a broker.
  • Low Fees: Most of the best investment funds for 2020 will charge an ongoing fee of less than 1% per year. Some are much closer to 0% – especially ETFs and index funds. Even at the higher end of the scale, this offers good value as you will be investing on a passive basis.
  • Diversification: Diversification allows you to reduce your overall exposure to risk by investing in heaps of assets across multiple industries and markets. Achieving this goal as a DIY investor can be both costly and time-consuming. This isn’t the case with investment funds, as you can often gain exposure to hundreds (if not thousands) of assets via a single injection of capital.
  • Difficult to Access Markets: Some financial markets can be difficult to access for the everyday UK investor. An example of this is stocks and shares listed in the emerging markets. Investment funds, on the other, often have billions of pounds under management. This means that there is no marketplace inaccessible for them. As such, investment funds offer a backdoor into a specific asset or sector that you’ve been trying to gain exposure to.

How to Choose the Best Investment Funds 2020

With so many top investment funds to choose from, knowing where to start can be challenging. The most important thing is that the fund meets your long-term investment objectives. For example, are you looking to grow your money over many decades to save for a retirement pot, or are you looking to access a specific marketplace like foreign bonds or US securities?

How to choose an investment fund

Either way, below you’ll find a list of metrics that you should look out for in your hunt for an investment fund that meets your needs.

  • Type of Fund: You first need to explore what type of investment fund the provider is offering. This might consist of an ETF, mutual fund, trust, or index fund.
  • Objectives: What asset or marketplace is the fund looking to focus on? This can be anything from large-cal US stocks to bonds issued in the emerging markets.
  • Previous Returns: Look to see what returns the investment fund has generated over the past few years. Compare these returns not only to industry counterparts but the wider marketplace.
  • Ongoing Fees: Most funds charge an ongoing fee – which is expressed as a percentage. While most funds come in at less than 1% annually, some can be a lot more expensive. Also, look out for performance and upfront fees.
  • Minimum Investment: Check to see how much the investment fund provider requires a minimum lump sum. If the amount is too much, you’ll likely be able to find a lower minimum at a third-party broker.
  • Risk: Leading investment fund providers like Vanguard offer a risk rating on each of its products. This allows you to gauge how much risk you are likely taking by investing in the fund.
  • Dividend Frequency: Make sure you know the frequency in which the investment fund will distribute your share of dividends. This is usually every three months but can be bi-annually or even annually.

As you can see from the above, there are a lot of metrics to consider before selecting an investment fund. This is why it’s worth exploring some of the top-rate funds that we have discussed on this page – all of which are available to UK investors.

Best Investment Fund Brokers in the UK

If you want to invest in an investment fund you will need to find a reliable online broker that is regulated by the FCA. Although some fund providers allow you to invest directly through their website, you will often find that fees and account minimums are higher. As such, we would suggest sticking with a third-party platform.

Here are our top 5 investment fund brokers available to UK residents.

1. eToro – Overall Best Investment Fund Broker in the UK

eToro is the best option on the table if you are looking to invest in ETFs. This is because the platform does not charge any commissions or dealing fees – nor are there any annual costs. Instead, the only fee that you need to consider is a small 0.5% currency conversion swap when you first make a deposit.

In total, the platform gives you access to over 150 funds. This covers a wide spectrum of markets – such as UK and US stocks, bonds, gold, and more. Additionally, eToro allows you to invest over 1,700 stocks from 17 stock exchanges. This might come in handy if you want to add specific shares to your portfolio that aren’t covered by the fund. Once again, this is commission-free.

When it comes to payments, eToro allows you to instantly deposit funds with a debit or credit card, as well as e-wallets like Paypal, Skrill, and Neteller. Bank transfers are also an option, but we would avoid this as it will take several days for the funds to arrive. The minimum deposit at eToro is $200, although you can invest from just $50 into your chosen fund. The broker is FCA-licensed, and your funds are protected by the FSCS (up to the first £85,000).

eToro also offers an excellent investment app which is the perfect way to invest in investment funds on your mobile.

eToro fees:

Commission0%
Deposit FeeFree
Withdrawal fee$5
Inactivity fees$10 a month after 12 months inactivity

 

Pros:

  • Super user-friendly online trading platform
  • Buy stocks without paying any commission or share dealing charges
  • Trade CFDs in the form of stocks, indices, commodities, forex, and more
  • 800+ stocks listed on the UK and international markets
  • Deposit funds with a debit/credit card, e-wallet, or UK bank account
  • Ability to copy the trades of other users
  • FCA and FSCS protections

Cons:

  • Not suitable for advanced traders that like to perform technical analysis

75% of retail investors lose money trading CFDs at this site

2. Plus500 – Commission-Free CFD Trading Platform

This trading platform specialises in CFDs – meaning that you can place buy and sell orders on your chosen fund. This gives you much more flexibility, as you attempt to profit irrespective of which way the markets go. Plus500 is also worth considering if you are planning to trade with leverage. This will vary between 1:2 and 1:30 – depending on the financial instruments.

All CFDs at Plus500 can be traded on a commission-free basis – and we find that spreads are typically very tight. Supported payment methods include a debit/credit card, Paypal, and bank transfer. The minimum deposit amount is £100 and there are no transaction fees. This CFD platform is licensed by the FCA and its parent company is listed on the London Stock Exchange.

Plus500 fees:

Commission0%
Deposit FeeFree
Withdrawal feeFree
Inactivity fees$10 per quarter after 3 months inactivity

 

Pros:

  • Commission-free CFD platform – only pay the spread
  • Thousands of financial instruments across heaps of markets
  • Retail clients can trade stock CFDs with leverage of up to 1:5
  • You can short-sell a stock CFD if you think its value will go down
  • It takes just minutes to open an account and deposit funds

Cons:

  • More suitable for experienced traders

80.5% of retail investors lose money trading CFDs at this site

3. IG – Trusted UK Investment Fund Broker With ISA Accounts

IG offers over 10,000 traditional shares and funds – all of which you can access as a UK investor. This covers mutual funds, ETFs, and investment trusts. Fees will vary at this platform, but IG notes that on average UK investment funds will cost you about 0.14% annually. Expect to pay more when investing in mutual funds.

IG also offers ISA accounts, which is well worth considering as it will allow you to shield the first £20,000 that you invest from capital gains and dividend tax. If you also like the sound of trading, IG offers fund CFDs. This comes with the benefit of being able to short-sell your chosen fund or apply leverage. This FCA broker requires a minimum deposit of £250 and supports debit/credit cards and a bank transfer.

IG fees:

Commission0% commission on all CFD instruments apart from shares. Fees vary depending on the exchange.
Deposit FeeFree (0.5%-1% fee on credit cards)
Withdrawal feeFree
Inactivity fees£12 a month after 2 years inactivity

 

Pros:

  • Trusted UK broker with a long-standing reputation
  • Good value share dealing services
  • Leverage and short-selling also available
  • Spread betting and CFD products
  • Access to the UK and international markets
  • Great research department

Cons:

  • A minimum deposit of £250
  • US stocks have a $15 minimum commission

Your capital is at risk

4. Hargreaves Lansdown – Best Investment Fund Broker for Reputation

Hargreaves Lansdown is a major player in the UK brokerage scene. It is regulated by the FCA, your funds are protected by the FSCS, and its parent company is listed on the London Stock Exchange. This platform offers thousands of investment funds of all types. Whether you’re after investment trusts, index funds, mutual funds, or ETFs – Hargreaves has you covered.

You can get started with a minimum investment of £100 or sign up for a monthly direct debit of £25 or more. If you opt for a lump sum, then debit card and bank account transfers are supported. You won’t pay any fees to fund your account, but your chosen investment fund will come with an annual charge. Additionally, Hargreaves offers ISA accounts.

Hargreaves Lansdown fees:

CommissionAverage of 0.45% per year for investments less than £250k
Deposit FeeFree
Withdrawal feeFree
Inactivity feesN/A


Pros:

  • Thousands of UK and international shares supported
  • Also offers bonds, investment trusts, ETFs, and mutual funds
  • Gain access to newly launched UK IPOs
  • Easily deposit and withdraw funds without being charged
  • Industry-leading research and analysis department
  • Telephone customer support is highly rated

Cons:

  • Entry-level commission of £11.95 per trade
  • Doesn’t allow you to trade CFDs or apply leverage

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5. Fineco – Huge Library of Funds at Just 0.25% Per Year

Fineco logoFineco Bank is an Italian financial institution that now offers share dealing and trading services to UK investors. This platform offers heaps of different funds at a hugely competitive rate of just 0.25%. If you’re able to invest large volumes, this goes down to just 0.15% for everything over £250,000.

What we also like about Fineco is that you will not pay any dealing fees. This means that you can invest in as many funds as you like without getting hammered by flat charges. The minimum investment amount per fund is £100 and you will need to deposit cash from your UK bank account. Fineco is highly trusted in the UK trading space – with that all-important FCA license and FSCS protection.

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How to Invest in the Best Investment Funds UK Today

Looking to invest in an investment fund today but not sure where to start? Following the step-by-step instructions outlined below to make a fund purchase from the comfort of your home.

The guidelines below are based on our top-rated fund broker eToro – which allows you to invest commission-free with no ongoing charges. You can, of course, user any broker of your choosing. 

Step 1: Open an Online Trading Account

Visit the eToro website to begin the account opening process. You’ll need to provide some personal information – such as your full name, date of birth, home address, and national insurance number. You will also need to enter your email address and mobile number, and choose a username and password,

eToro sign up

After opening your account, eToro will ask you to upload some ID documents. This needs to be either a passport or driver’s license and a proof of address. The latter can be a recently issued bank account statement or a utility bill. If you don’t have time to upload these documents now, you can still proceed with a deposit, but it must be less than $2,250.

Step 2: Deposit Funds

You will now be asked to deposit some funds into your newly created investment account.

eToro accepts the following UK payment methods:

  • Debit Card
  • Credit Card
  • Bank Transfer
  • Paypal
  • Skrill
  • Neteller

The minimum deposit amount is $200, and all payments are instantly processed unless you opt for a bank transfer.

Step 3: Choose a Fund

eToro offers over 150 top investment funds in the form of ETFs. By clicking on the ‘Trade Markets’ button followed by ‘ETFs’, you can see what’s available. Invest in investment funds at eToro

Alternatively, if you already know which ETF you want to invest in, enter it into the search box at the top of the page.

Step 4: Select Investment Amount and Confirm Order

Once you have selected an investment fund, it’s then just a case of entering the amount you wish to stake. This needs to be at least $50.

Invest in investment funds at eToro

Upon confirming the order, the investment fund will be added to your eToro portfolio. It will remain there until you decide to cash the fund out. In the meantime, you’ll likely receive quarterly dividends.

Conclusion

The investment fund space is getting more and more popular with UK traders, as the end-to-end process is passive. All you need to do is select a fund, meet the minimum investment amount and that’s it – there is nothing more to do.

On top of growing your capital as the net asset value of the fund increases, you can also earn dividends. This is your share of stock dividends or bond coupon payments – and is typically distributed every three months.

If you want to get started with an investment fund today, the process rarely takes more than 10 minutes when using eToro. You can instantly deposit funds with this FCA broker and invest in a fund from just $50. The best part about using eToro for this purpose is that you won’t pay any commissions or ongoing fees.

eToro – Invest in the Best Investment Funds with 0% Commission

75% of retail investor accounts lose money when trading CFDs with this provider.

 

FAQs

What is an investment fund?

Investment funds usually come in the form of ETFs, mutual funds, or investment trusts. They will pool investor funds together and then buy and sell assets on your behalf. In return, you will pay a small annual charge - which is usually less than 1% per year.

Do investment funds pay dividends?

Yes - investment funds will usually distribute dividends every three, six, or 12 months. This is your share of any stock dividends or bond coupon payments that the provider has received on your behalf.

How do you sell an investment fund?

This depends on the type of investment fund and the location in which you invested. For example, if you invested in an ETF - these are publicly traded. This means that you can cash out your fund investment at any time during standard market hours. If you invested in a mutual fund or trust, you can usually cash out at the end of each trading day. Just make sure to check whether or not there is a minimum redemption period in place.

How much do investment funds cost?

Most of the best investment funds for 2020 charge less than 1% per year. Mutual funds are often more costly than ETFs, albeit, the most expensive fund type appears to be ethical funds. .

Who is the best investment fund provider?

There are hundreds of providers active in the investment fund scene. Some of the most active include iShares, Vanguard, and SPDR.

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Kane Pepi

About Kane Pepi

Kane Pepi is a British researcher and writer that specializes in finance, financial crime, and blockchain technology. Now based in Malta, Kane writes for a number of platforms in the online domain. In particular, Kane is skilled at explaining complex financial subjects in a user-friendly manner. Academically, Kane holds a Bachelor’s Degree in Finance, a Master’s Degree in Financial Crime, and he is currently engaged in a Doctorate Degree researching the money laundering threats of the blockchain economy. Kane is also behind peer-reviewed publications - which includes an in-depth study into the relationship between money laundering and UK bookmakers. You will also find Kane’s material at websites such as MoneyCheck, the Motley Fool, InsideBitcoins, Blockonomi, Learnbonds, and the Malta Association of Compliance Officers.