Younger investors are at the beginning of their working lives, often investing for the first time, and potentially have a very long time horizon. This can be a great advantage as a multi-decade period means a high-risk strategy can be well worth taking – provided of course too much risk isn’t taken. Very high levels of risk can bring ruinous levels of loss that are impossible to recover from!
Although it can be exciting to trade individual shares and other high-risk, speculative investments, it's often better to take a ‘buy and hold’ approach and diversify – spread your money around so you aren’t too reliant on one company or strategy. This approach doesn’t have to be boring, though. There are some higher-risk funds that can spread your money around global markets or a specific theme or area so you can harness key trends without taking on the extra risk of heavy losses from backing one or a small number of businesses.
Here are a selection of funds our Collectives Research Team believe are well managed, exploit important structural themes and have great long term potential.
Please note these are provided for your information. Any investment you choose should meet with your own personal circumstances and objectives, taking into consideration your existing portfolio.
This adventurous investment trust aims to invest in companies that harness the power of technological change, create new markets or uproot existing ones, and in doing so provide investors with substantial growth opportunities in areas diverse as finance, energy, healthcare and transport. There is a particular focus on innovation among US companies, particularly Silicon Valley tech leaders, and on China where managers James Anderson and Tom Slater of Baillie Gifford have also established a presence a network of contacts.
Companies the managers have backed from an early stage include tech successes Amazon, Google (now Alphabet) and Facebook, as well as China’s internet giants Alibaba and Tencent. Now, they are looking for the next wave of companies with the potential to provide significant growth.
Private investments have contributed significantly to the Trust’s returns and represent, perhaps, the biggest ‘edge’ the managers possess. Just over a third of the current portfolio started off in the unquoted arena and increasingly the managers see non-listed investments – ones to which regular investors cannot gain access – as offering the best potential in the future. That’s because some of the most innovative companies in the world today are private businesses, often because they are technology-based and have lower costs meaning there is little need to raise capital via the stock market to grow. This Trust provides ordinary investors with a route into that world and the growth potential it offers.>
To achieve climate goals, how we produce, distribute and consume energy will have to change significantly and will require huge investment – as much as $120 trillion has been estimated. From a purely economic perspective, renewable energy also makes sense – it is now the lowest cost form of generation in most markets.
It is clear companies have a key role to play in the battle against climate change and the evolution of a more sustainable energy system, and the investment required will likely create significant opportunities. Businesses delivering products or services that are part of the solution should be well placed to deliver growth to shareholders.
This fund is broader than many of its peers, investing across the entire sustainable energy industry from production to end-use. There has been a surge in interest in renewable energy stocks recently and consequently, valuations have become more expensive, so we believe a selective, disciplined and active approach such as the one adopted by this fund is a sensible means of accessing an exciting theme. It is also worth noting that it excludes companies involved in fossil fuels and nuclear energy, as well as applying ESG screens, so it could be of interest to many responsible investors too.
With the dominance of the US market in recent years, emerging markets exposure has taken the back seat for some investors. Yet they are a vital component of any long-term growth portfolio owing to the remarkable structural trends taking place.
The growing middle class in emerging markets is expected to have surpassed 2.3bn in 2020 and their increased prosperity is driving spending. HSBC estimates that total household wealth in China will grow by more than 50% in the next five years. Smartphone sales in emerging markets are 3 times that of developed markets and China alone accounts for more internet users than the US, UK Germany, France and Japan combined. Many of the world’s most innovative companies also reside in the developing world, evidenced by the fact that it accounts for more than half the world’s patent applications.
Templeton Emerging Markets is one way to own a spread of innovative companies from the emerging world, including leading technology stocks such as Samsung and as well as Chinese internet groups Tencent and Alibaba. These giants have come under recent pressure owing to new regulations imposed by the Chinese government, but there will still be opportunities for investors in China over the long term as there is room for many companies to grow strongly, especially in fast-growing consumer markets.
This Trust is a worthy consideration for exposure to the asset class owing to the breadth and experience of the management and analyst team and the higher-conviction approach it has adopted.
Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.
Three investments under 30s could consider for the long term
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