The top UK funds picked by HL investors

• US funds have topped the best buy lists over the past three years.
• But UK funds offer a valuation opportunity – and income – that US investments can’t beat.
• The FTSE 100 is trading at a 45% discount, compared to the S&P 500.
• We reveal the top 10 most popular UK funds with HL clients.

Emma Wall, head of investment analysis and research, Hargreaves Lansdown:

“The General Election may be dominating the headlines, but the most exciting opportunity for investors is not linked to who takes parliament or who next inhabits number 10 Downing Street. Instead of polls, investors should be looking at a different set of data – valuations. Because, despite hitting an all-time high earlier this year, the UK stock market is still trading on a significant discount, both compared to history and to its developed market peers. Currently, the FTSE 100 is trading at a 45% discount, compared to the S&P 500, based on a one year forward price to earnings valuation.

The UK is home to some fantastic businesses with international revenues, market leading positions, brand advantages, patented products – political party agnostic. Plenty of them are also offering well-covered dividends, and thanks to the little or no debt on their balance sheets, haven’t felt the python squeeze of high interest rates.

If you are looking to pick up the domestic market on a discount, consider HL analysts’ top picks: Artemis Income, Liontrust UK Growth and Royal London UK Smaller Companies, which are three different funds to offer a blend of opportunities within the UK market. Or if you’d prefer to vote with the majority, we’re revealing the top 10 most popular funds on the HL platform – across all UK Investment Association sectors, including equities and bonds. Artemis Income takes the top spot for clients too, and perhaps this should be no surprise given that Adrian Frost, the fund’s manager, is one of the UK’s most experienced equity income managers. There are also two co-managers to support him, and a disciplined process which focuses on companies able to pay consistent dividends.

Income in general seems to be in vogue, with four of the top 10 having an income bias, proving what fertile ground for dividends the UK is. The other three popular with our clients are Invesco UK Equity High Income, Jupiter Income and Marlborough Multi Cap Income. There are three passive funds in the list, showing that the trend towards low-cost passives extends into undervalued markets like the UK. The remaining selections are Fidelity Special Situations, a value-focused fund managed using a contrarian approach, which also features on the Wealth Shortlist; Lindsell Train UK, as the only growth fund; and Royal London Sterling Extra Yield Bond, which is a high-yield bond fund providing an attractive income.

Investors should look through the political noise this summer and focus on their long-term investment goals.  While the US has dominated the best buy lists for the last three years, now may be a good time to crystallise those gains and recycle that money back into undervalued areas of the global market, such as the UK.”

HL data