Funds for the first timer

By DAILY MAIL REPORTER
Updated:

 

We talk to leading financial advisers about which funds should be in your investment portfolio. This week, funds for first-time investors.

M&G Recovery

• Size: £1.7bn
• Value of £100 per month after one year (£1,200 invested): £1,406
• After five years (£6,000 invested) : £9,576
• Minimum investment: £500 lump sum/£10 a month

M&G Recovery is in the UK All Companies sector and is seen as a good start for those with plenty of years to invest. Fund manager Tom Dobell looks for companies that are in trouble but will recover.

The fund therefore has companies in different stages of recovery from those starting the process to those that have recovered and are now performing well.

Those he selects tend to be large and medium-size although there are some small companies in the fund, too.

Mainstays include GlaxosmithKline (6%), HSBC (6%), Tullow Oil (5%) and Vodafone (4.5%).

Recommended by Tim Cockerill, independent financial adviser (IFA) at Rowan: 'It is a very well-tested investment process which, long-term, has delivered some very good results. M&G is merging it with its British Opportunities fund but I don't see this as a problem.'

Paul Ilott of Bates adds: 'Some fund managers are prepared to invest in companies without meeting the company's management team, but for Tom Dobell this is essential - he likes to get a thorough understanding of the people who run the businesses he buys into.

'He backs relatively unloved companies and has the patience to hold onto them for the longer term until their fortunes recover. This approach can go out of fashion from time to time, but has been very rewarding for longer-term investors.'

Mark Dampier of Hargreaves Lansdown, though less enthusiastic, says: 'Tom Dobell loves his job. Basically, he chooses companies that are done in - he looks for bad news and buys on that.

'It doesn't always work as one or two investments are bound to go wrong but mostly he gets it right.'

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