Three UK
Fund
ideas
HL’s experts share their ideas for UK funds they believe have long-term potential.
Important notes
This page isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.
Joseph Hill, Senior Investment Analyst
The UK is home to lots of world-class companies. There are international giants selling their goods and services across the globe, who aren’t reliant on the strength of the UK economy to thrive. There’s also a diverse array of innovative smaller businesses, some of which are pioneers of emerging industries with the potential to blossom into the giants of tomorrow.
The UK has a long reputation as a happy hunting ground for income investors, and with good reason. Many businesses boast impressive records of growing dividends over the long term. However, the stock market remains out of favour and unloved by many investors.
There have also been significant share buybacks, when a company buys its own shares. This means there are fewer in existence, which can push up the share value.
We think the combination of this, attractive and growing dividends, and the discount the UK market continues to trade on makes it an attractive time to consider investing.
Investing in these funds isn’t right for everyone. Investors should only invest if the fund’s objectives are aligned with their own, and there’s a specific need for the type of investment being made.
Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a diversified portfolio.
This isn’t personal advice or a recommendation to invest and remember all investments and any income they produce can fall as well as rise in value – you could get back less than you invest. Past performance is not a guide to future returns. If you’re not sure an investment is right for you, please seek advice. For more details on each fund and its risks, you can use the links to their factsheets and key investor information below.
Information correct as at 25 April 2024 unless otherwise stated.
Keep an eye on our UK fund ideas
Would you like to see how these funds get on in the future?
Watchlists let you track investments without spending real money. Set one up to follow the performance of our UK fund ideas, create your own watchlist or copy the details of real holdings.
To follow these funds, use the ‘add to watchlist’ button below the name of each fund. Then log in to your account to keep track online or with the HL mobile app.
Keep an eye on our UK fund ideas
Watchlists let you track investments without spending real money. Set one up to follow the performance of our UK fund ideas, create your own watchlist or copy the details of real holdings.
To follow these funds, you’ll need to open an account. There are different types of investment account available, and the right one for you will depend on your goals.
Once you’ve opened an account, you can use the ‘add to watchlist’ button below the name of each fund to keep track online or with the HL mobile app.
Artemis Income
Aiming for sustainable income whatever the weather
We think the Artemis Income team are one of the best in the business and are well placed to make the most of UK income opportunities. The experienced trio of Nick Shenton, Andy Marsh and industry stalwart Adrian Frost have over 80 years of investment experience between them and have developed a strong working partnership at Artemis. They mainly invest in large UK businesses but will invest in some medium-sized companies when they find great opportunities.
The fund invests in companies that they think can pay a sustainable income through the market cycle, whatever the economic backdrop. These tend to be businesses with lots of reoccurring revenues. This increases the chance they can retain and grow their customer base, profits, and therefore dividends over time, although nothing is guaranteed.
We view this as a more conventional, core UK equity income fund that could work well alongside other asset classes in an income focused portfolio. At the time of writing, the fund yields 4.03%, though yields are variable and not guaranteed. The fund takes charges from capital, which can increase the yield but reduce the potential for capital growth.
Income received on a £10,000 investment in 2013
Past performance is not a guide to the future.
Source: Lipper IM
Liontrust UK Growth
Investing with a quality focus
Anthony Cross, Julian Fosh, Matt Tonge and Victoria Stevens employ the economic advantage investment process which has served investors well over the years. The managers think the secret to successful investing is picking out companies with a sustainable edge over the competition. They believe this will allow them to earn above-average profits over the long term.
Given their long-term time horizon, the managers believe the initial price paid is less important to overall returns than the company's ability to grow earnings and profits. They believe the hardest economic advantages to copy are intellectual property, like patents and trademarks, strong distribution channels and significant repeat business. A company must have at least one of these attributes before it's considered for the fund. The managers can invest in derivatives and smaller companies, which adds risk.
The fund's quality focus means we expect it to lag the broader stock market when it's rising quickly but to hold up better when markets fall. The fund could work well alongside other funds investing in unloved UK companies with recovery potential. We think the team have a range of expertise and their stock picking skills have the potential to drive returns in the future.
Investors should note that the fund holds shares in Hargreaves Lansdown plc.
Sector breakdown
Source: Liontrust (correct as at 31 March 2024)
Royal London UK Smaller Companies
Looking to uncover hidden gems
Lead manager Henry Lowson has spent his entire investing career focused on analysing UK higher-risk small and medium-sized companies. He and deputy manager Henry Burrell aim to deliver long-term growth by investing in some of the smallest companies in the UK stock market with plenty of growth potential. Smaller companies typically have more room for growth than larger ones, though they’re more volatile and higher risk.
The managers aim to invest in financially resilient, quality growth companies trading at attractive valuations and with the ability to survive or thrive when times get tough. With less research focused on this part of the market compared to larger companies, the managers aim to use their experience to uncover hidden gems.
The fund could add diversification to the UK portion of a more adventurous portfolio, or one focused on larger, more established businesses. Its growth focus could also complement other investments in out-of-favour value companies.
Where does the fund invest?
Source: Royal London (correct as at 31 March 2024)
The UK in your investment portfolio
You can make the most of the investment opportunity the UK offers, but it’s vital to invest across different countries, as well as industries and companies, to achieve a diversified portfolio.
Five reasons to buy funds with HL
Whether you’re a first time or experienced fund investor, we can help you. You’ll get all the tools and information to make picking funds easy, giving you the best chance to grow your money over the longer term and reach your future goals.
- Great value – there’s no charge to buy and sell funds and you’ll never pay more than 0.45% per year to hold funds with us. Any investments you choose will have additional charges. View our charges.
- Expert investment research – our experts spend thousands of hours analysing investments each year to come up with the Wealth Shortlist, our list of funds they think have the best performance potential over the longer term.
- Low minimum investment – start investing in funds from £100 lump sum or £25 per month.
- Wide variety of account options – whether you’re investing for your self or a child, we have different investment accounts to help you meet your goals.
- Easy to get started – if you don’t want to choose your own funds, we have other options such as using our ready-made investments, or you can speak to an HL financial adviser.
Important notes
This page isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.
