Small-Cap Funds
The young and small businesses that make up these types of funds are capable of experiencing rapid growth, which can offer the potential for higher long-term returns. However, with this comes increased risk - less established businesses are prone to greater fluctuations. Small-cap companies generally have a market capitalisation of less than £1.5 billion.
Mutual funds are a popular and convenient option designed to help people achieve their investment goals. In a mutual fund, investors pool their money together to buy a portfolio of stocks, bonds or other securities. A team of fund managers and research analysts do the groundwork allowing investors to take advantage of professional portfolio management and diversification at a reasonable cost.
Types of UK mutual funds
There are a number of different types of UK mutual funds, each with their own characteristics and level of risk.
UK Equity Funds
Our actively-managed UK equity funds allow our expert portfolio managers to act dynamically when selecting securities and during market changes. They provide the opportunity to invest across the market capitalisation (cap) spectrum and across industries.
Mid-Cap Funds
Consisting of middle-weight companies, these companies have a market capitalisation of £1.5 billion to £7 billion. If you’re in the UK, that’s everything in the FTSE 250. On average, mid-cap funds can offer more stability than small-caps but can experience greater fluctuations than a large-cap fund which may appeal to investors interested in potentially higher returns and more comfortable with risk.
Equity Income Funds
Equity income funds purchase equity, or stock ownership, in companies. These funds generally seek to generate income from stocks that pay dividends and may also seek capital appreciation as the value of the stocks in the fund increases.
Dividend Funds
These funds comprise companies that pay dividends to shareholders. Typically, dividend-paying companies are well-established, large-cap companies. Whether utilised to provide a reliable form of income or to reinvest and build wealth, dividends may offer a more secure form of returns than other forms of equity funds.
UK Fixed Income
Fixed income funds invest in bonds and other debt securities with the aim of preserving your capital and generating regular returns.
Corporate Bonds
Companies use corporate bonds to leverage capital from investors. They give investors the relative security of bond returns while still offering buy-and-sell flexibility. This allows our portfolio managers to be proactive and reactive to market shifts.
If your current portfolio is mainly made up of equities, corporate bonds can be a strong, high-yield way to diversify.
Government Bonds
Through these funds, you’ll lend the UK government, or an overseas government, money in return for regular interest rate payments. Government bonds are aimed at investors looking for lower-risk opportunities, and with that comes a lower return in comparison to other investments.
UK government bonds, or gilts, are often seen as a reliable investment as the UK government has no historical record of defaulting on its payments and coupons.
What are the benefits of UK mutual funds?
Mutual funds have several advantages over holding individual securities in your investment portfolio.
Professional Management
A mutual fund offers investors access to full-time, professional fund managers who have the expertise, experience and resources to actively buy, sell, and monitor investments.
Diversification
Mutual funds invest in a variety of securities. If one investment decreases in value, another investment in the portfolio may increase.
Affordability
Mutual funds enable you to hold a wide variety of securities at a much lower cost than you could on your own. For many people, it would be more costly to purchase directly all of the individual securities held by a single mutual fund.
Franklin Templeton’s Featured UK Mutual Funds
FTF Martin Currie UK Rising Dividends Fund
The Fund aims to grow in value by more than the FTSE All-Share Index by generating a growing level of income, together with investment growth over a three to five-year period after all fees and costs are deducted.
FTF Martin Currie UK Mid Cap Fund
The Fund aims to grow in value by more than the FTSE 250 (ex-Investment Trusts) Index, from a combination of income and investment growth over a three to five-year period after all fees and costs are deducted.
FTF Franklin UK Gilt Fund
The Fund aims to outperform the FTSE UK Gilts (All) Government Total Return Index over a three to five-year period from a combination of income and investment growth, after all fees and costs are deducted.
How to invest in UK mutual funds?
Franklin Templeton’s UK mutual funds are available to buy through financial advisers. We believe investors can benefit from the value of professional advice.
To learn more about the advantages and how you can find a financial adviser