Please remember, investment value can go up or down and you could get back less than you invest. The value of international investments may be affected by currency fluctuations which might reduce their value in sterling.
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Fund ideas from our experts
With thousands of funds to choose from, it is easy to become overwhelmed. To help, our impartial experts have selected ideas for a wide range of active and passive funds, investment trusts, and exchange-traded funds (ETFs).
Most popular funds
Below is a preview of the most purchased funds by ii customers over recent months. For more detailed insights and performance data, visit our top investment funds page.
Most purchased funds in Q4 2023
Source: interactive investor. Note: the top 10 is based on the number of “buys” between 1 October and 31 December 2023.
Why choose interactive investor to buy funds?
- We offer one of the widest choice of investments in the market – more than 40,000 UK & global investment options, including over 3,000 funds.
- Our flat fee plans start from £4.99 per month. Most other investment platforms charge a percentage fee that grows with your investments.
- The £4.99 monthly fee includes our Stocks & Shares ISA and Trading Account.
- Free regular investing across all of our plans.
Income Fundamentals series
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Learn more about funds
A fund is a type of pooled investment, which gives investors access to a spread of companies.
They are structured as either unit trusts or open-ended investment companies (OEICs), but in practice there is little difference between the two as far as private investors are concerned. A full explanation, though, can be found on our Unit Trusts & OEICS page.
With funds, there are two investment styles: actively managed funds (in which the choice of companies is made by a professional fund manager) and passively managed funds (which invest in the constituents of a stock market index and therefore follow its fortunes up and down).
Each investor in a fund receives shares or units, which represent a portion of the holdings of the fund.
Funds are sometimes known as 'mutual funds', although this is not a commonly used term in the UK.
An actively managed investment fund has an individual fund manager (or a team of managers) who make investment decisions for the fund. Investors who buy active funds hope the fund manager(s) will outperform rival active funds and a comparable stock market index.
Passive funds, also known as index trackers, tracks the up and down movements of a stock market index (such as the FTSE 100) - or a filtered version of it. No active decisions are made – instead the composition of the index is mirrored by the fund. Therefore, investors should expect the return of the fund to be close to the performance of the index, but with a slight lag due to the fund charge. As well as index trackers, passive funds can also be structured as exchange-traded funds (ETFs).
Broadly speaking funds can be divided according to whether they invest in equities, bonds or property. In addition, there are more specialist funds: some invest in alternative assets (such as infrastructure) and others in commodities (such as gold and oil). There are also multi-asset funds, which invest in a mixture of assets.
Funds either invest globally or on a regional basis in a developed market (US, UK or Europe) or across Asia and the emerging markets.
There is not one single fund that meets everybody's goals and needs, but a combination of different types of funds and investment trusts can help investors achieve a diversified portfolio, which helps to reduce risk. A mixed investment approach gives a portfolio ample opportunity to grow, while at the same time helping to guard against serious short-term losses.
This reflects the fact that different types of investment are unlikely all to outperform or underperform at the same time, which therefore reduces the volatility of your overall portfolio.
If you are not a customer of interactive investor you will need to open an account. It is easy to add funds to your portfolio using our online account.
Bear in mind that as well as our fee, funds charge a separate annual fee, which is paid to the fund management company. Actively managed funds tend to have an ongoing charges figure (OCF) of between 0.85% and 1% a year. In pounds and pence this works out at £85 to £100 on a £10,000 investment. Passively managed funds are cheaper, with some index funds and ETFs for two of the main developed markets (US and UK) costing less than 0.1%. A 0.1% charge would work out at £10 on a £10,000 investment.
The income units pay out any income generated by the fund (such as dividends from shares or coupons from bonds), while for accumulation units, this is simply reinvested back into the fund.
The income share class is suited to those who want to draw an income - for instance those using their investments to help fund their retirement. In contrast, the accumulation share class is a better choice for those who do not need or wish to have the income generated by the fund returned to them as they are building up their ISA and/or SIPP. Those who pick the accumulation share class will benefit from the power of compounding, which means in effect that investors get returns on their returns.
'Mutual funds' is essentially another term for investment funds. It is a more common term in the US.
The price and value of investments and their income fluctuates, so you may get back less than the amount you invested. If you are unsure about the suitability of a particular investment or think that you need a personal recommendation, you should speak to a suitably qualified financial adviser.
The information we provide in the ii Super 60 is an opinion provided by ii or one of its partners on whether to buy a specific investment. Please note that none of the opinions we provide is a personal recommendation.
Remember that each fund is unique and exposed to different levels of risk. While some are relatively low risk, others can be very risky and will only be appropriate for more sophisticated investors.
There may be a fund manager charge, which is a percentage of the value of your investment. This can differ depending on the fund.
We charge a monthly flat fee to cover the cost of our services, including the administration of your funds.