How to Invest in Funds in the UK

Across the global community, the search is on to maximise savings and investments and make every penny work hard.

While it can sometimes feel like you need a translation qualification to decipher the jargon that surrounds investments, we’re here to make it clear and simple.

This short guide will serve as an introduction to help you make the most of your money and find the best way to invest in funds.

Why Invest in Funds?

Investing in funds is an option that financial advisors often recommend to investors with relatively small sums available.

If you were to select a series of individual companies to buy shares in, you would need to do thorough research to provide yourself with the best possible chance of a return on your investment.

However, if you invest in funds – or investment trusts – it means that you are pooling your money with other investors in a similar situation to you own. In effect, it spreads the risk across companies, and cushions you to a degree.

The fund manager would take the pooled investments and find a wide range of assets which promise the highest returns. This could include, for example,

This could include, for example, the UK or overseas shares of bonds. It is even possible to invest in funds in particular industry sectors, locations or for monthly income.

How do I Choose Which Funds to Invest In?

It all comes down to personal choice.

Some people prefer to find the best-supported fund options or seek out the investment trusts and exchange-traded funds that they feel most comfortable with.

Others seek advice from an intermediary who can track down funds that are more creative and less supported, which may have the potential to be the best investments.

One of the biggest advantages of investing in funds is that you are buying into the fund manager’s expertise and insights.

They have spent time researching and understanding a diverse range of options, so they can spread the investment over multiple assets. They will then charge a fee for management of the assets.

An alternative to a fund is to put money into an index tracker, which tracks the price of the FTSE 100, for example. These index trackers generally have lower fees than funds.

Different investing platforms will have competing fee structures, but individual funds will also charge varying percentages as the fee.

Some of the most well-known providers of these services are Hargreaves Lansdown, AJ Bell Youinvest and BestInvest.

Rise of the Robot Investors

Over the last few years, ‘roboadvisors’ have attempted to disrupt this fee structure, and use apps to make investing easier to use.

Nutmeg, Moneyfarm and Wealthify are examples of platforms which operate in this way and may serve as a great introduction if you are not confident about selecting your own investments.

It is often recommended that investment in funds is seen as a medium to long term option – at least five years – to give the best chance of a return on the sums you have invested.

The Risks of Investing in Funds

There’s no guarantee of dividend or equity growth, and past performance is not an indication of how the fund would perform in the future.

Because of this, when investing in funds your capital will be at risk. It’s possible to get back less than you invested.


Naomi Gould

Naomi was born New York and grew up in London learning to observe how businesses and finance works from her Father. Naomi now lives in the Surrey Hills and explores at weekends on her road bike.