Jan 2020 update: Our more recent post highlights the best investment opportunities for your money in 2020
Welcome to Moneycube’s annual roundup of the best investments available in Ireland.
We’ve chosen five funds we think have strong potential, in 2019 and beyond.
Remember, these funds are all available through our online platform, along with many more. We can help you put in place lump sum and regular investments, big or small, to start growing your wealth today.
Best fund for new investors
Moneycube believes multi-asset funds should lie at the centre of most investors’ portfolios.
Whether you are investing a lump sum, setting up a regular investment, or both, multi-asset funds are useful. In a single fund, you can achieve the diversification, flexibility and balanced growth potential that most people need from their wealth.
Jan 2020 update: If you’re finding this article from last year interesting, our more recent post highlights the best investment opportunities for your money in 2020
For new investors, we’re sticking with our 2018 choice. Zurich’s Prisma 4 fund is a strong option for many new investors. It gives exposure to a broad range of assets, split among equites (54%), bonds (20%), alternative assets (17%), and property (4%).
Prisma 4 is also spread over the globe. 60% of the fund is invested in the US and Canada, 21% in Europe, 9% in Japan, and 10% in Asia-Pacific and South America.
And importantly, it has a track record of decent returns. In the five years to 31 January 2019, this fund has returned an average of 6.5% per year. That’s more than 35% total growth as this chart shows.
For contrast, your money in the bank has earned about 1.2% in interest during the same period.
As a runner-up, Irish Life’s MAPS 4 fund is a strong performer – but as we’ve explained elsewhere, it’s harder to invest in it on decent terms.
Best index fund for larger lump sums
If you have a lump sum of around €75,000 or higher, an index fund could be the answer. Put simply, these funds are set on auto-pilot to follow well-recognised indices, such as the FTSE100 list of top UK companies, or the S&P 500 list of major US firms.
For larger lump sums, it’s now possible to invest in these index funds at very low rates.
Because these funds are so large, and because they are passively managed, they charge much lower fund management fees. Including the cost of financial advice, you can access many index funds through Moneycube for under 1%.
For a large lump sum, we like Vanguard’s Eurozone stock index fund.
This €1.3 billion fund tracks over 250 of the Eurozone’s major listed companies, and would have turned €100,000 into almost €120,000 over the last five years.
Best investment for income
As an advisor focused on investing for the medium and long term, we’re often fans of a ‘set and forget’ approach to choosing your investment funds. That’s why we’re sticking with our 2018 recommendation for income investors in Ireland.
Aviva’s Eurozone equity income fund is invested in a selection of solid, dividend-producing stocks from numerous sectors, as the chart shows.
You’ll find big names such as France’s Total, Spain’s Banco Santander, and Deutsche Telekom in there. Its focus on Eurozone-headquartered businesses mitigates the currency risk to earnings, which is important to the income-seeking investor.
It’s not going to knock the lights out in terms of equity growth. But this fund has been on the go since 2000, since when it has produced an average annualized return of 3.8% – well over double the rate of inflation over the same time.
Best commercial property fund
In general, Moneycube believes equity funds should be the main emphasis for investors. But there’s no escaping Irish people’s love of property investment.
And the volatility in stock markets in late 2018 showed why it is so important to invest in a broad spread of asset classes (for example, through a multi-asset fund).
We like Friends First’s Irish commercial property fund.
This fund, which owns just over 50 commercial buildings, mainly in central Dublin. Highlights include three retail buildings on St Stephen’s Green and the Disney store on Grafton Street. Outside the capital, Friends First’s fund owns retail parks in Naas, Kilkenny and Carlow.
It produces a rental yield of over 5%. And more than 60% of its leases (by rent value) have at least five years to run.
Best pure equity fund for long-term investors
Long-term investors can afford ride out short-term market dips. That means they can take more risk with their money, to create the potential for better growth.
One of our favourites for investors in this position is Zurich’s International equity fund.
We like it for its flexibility, its fees, and its performance. You can invest a lump sum, a regular direct debit, or both. It’s available via Moneycube for an annual management charge of 1.25%, including the cost of financial advice.
And it has grown steadily, particularly over the last ten years, where it has returned an average annualized rate of 12.3%.
If you’d invested in this fund ten years ago, you’d have tripled your money, as the chart below demonstrates.
The companies in which Zurich’s International equity fund is invested is a roll-call of the global businesses which have delivered strong equity returns in recent years.
Tech firms Microsoft, Apple and Amazon are its top three holdings. And there are also substantial positions in financial, consumer and industrial businesses – overall the fund holds more than 300 stocks.
At Moneycube, we know everyone’s circumstances are different. The best investments for you right now might well be different from the funds we’ve highlighted above. But with more than 4,500 funds at our fingertips, we’re confident we can find a fund to suit you.
We hope these ideas will give you a starting point for investing in 2019. Now you can use our online platform to design an investment plan that’s right for you.