Closely aligned to the Ready-made portfolios offered by some of the direct platforms (which we look at elsewhere) are the lists of recommended funds selected by platforms. These are the funds that the platforms and their in-house experts consider to have a good fund manager, a reliable track record and are likely to do well for their investors over time. Without such guidance, and with over 2,000 funds to choose from, it is easy to be influenced by whichever fund is top of the league tables at the time or is being tipped by commentators, who may receive a commission for doing so.
The star ratings applied to funds by platforms, who variously brand them as ‘Premier’, ‘Calibre’, ‘Best Buy’ or ‘Wealth 150′ lists can therefore offer a more objective approach to selecting funds for your portfolio. If you cross reference the lists to see which funds appear in more than one list you can be reasonably sure of finding a fund that has a better than average reputation – however, research in 2014 by The Platforum, a fund consultancy, found that not a single fund out of nearly 400 listed on the ‘buy’ lists of eight of the biggest brokers appears on every one. Just five funds appeared on seven out of eight lists, and only 16 managed to get onto five lists. (more…)
Sign up for our regular newsletter with the latest news on all aspects of the new Pension rules and how to manage your drawdown pension.