3 Top UK Equity Funds

FUND IN FOCUS: Which active and passive funds offering exposure to UK-listed companies are the highest rated among their peers?

Emma Wall 17 September, 2014 | 2:57PM
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UK investors often have a home bias when it comes to portfolio construction. Although it is important to geographically diversify, the FTSE 100 does glean 70% of its revenues from outside of the UK so investors in domestic stocks are gaining exposure to a more than just the domestic economy.

A UK equity fund can provide a good core holding for your portfolio, as developed market equities are on the whole less volatile than their emerging market counterparts.  Balance this with funds with US and European exposure, as well as investments that have exposure to fixed income.

Whether you choose to gain exposure to UK stocks using an active or passive investment we have highlighted three highly rated funds for you to consider for your portfolio.

JOHCM UK Opportunities

Using the Fund Screener we filtered for highly rated open-end funds within the Morningstar UK Large-Cap Blend Equity category. The JOHCM fund is Morningstar analyst Silver Rated and has a five star quantitative rating for past performance. Analyst Simon Molica says this fund is a good choice for investors who can afford to be patient.

“The team uses a long-term strategy that combines a top-down thematic overlay and bottom-up stock selection, with the latter focused on identifying quality stocks trading at reasonable valuations,” he said.

City of London (CTY)

This Gold Rated investment trust is a star performer – five stars in fact. There are several reasons why Morningstar analysts have such conviction in the fund.

“Job Curtis has been at the helm for more than 20 years—a length of tenure that’s rare to see,” said closed-fund analyst Jackie Beard. “Not only has the management been consistent, but the process used by Curtis is little changed over that time, too. Curtis is naturally a cautious investor and this caution has served shareholders well over the years.”

BlackRock UK Equity Tracker

This Bronze Rated tracker fund provides broad and diversified exposure to UK stocks and as such is a suitable core holding for UK investors. Analyst Hortense Bioy says BlackRock’s investment teams take significant advantage of the firm’s global reach, technology, and risk management solutions.

“In fact, BlackRock invests considerably in risk management solutions and there is strong evidence of how this is successfully integrated across a number of investment teams within the group,” she said.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
City of London Ord432.50 GBX-0.80Rating
JOHCM UK Opportunities A GBP Acc3.56 GBP-0.58Rating

About Author

Emma Wall  is former Senior International Editor for Morningstar

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