Jan 2024 update: Our more recent post highlights the best investment opportunities for your money in 2024.
Welcome to Moneycube’s annual roundup of the best investments available in Ireland.
We’ve chosen five funds we think have strong potential for as the world tries to get back to something like normal.
2020 was a year of ups and downs for investing in Ireland, as in the wider world, but if you stayed the course – like the vast majority of customers advised by Moneycube – you experienced remarkable investment growth.
New challenges, new investment opportunities
This year, the challenges are different, presenting new opportunities to invest for growth in Ireland.
Investors know they need to protect their money from inflation, as bank interest rates look set to remain on the floor and government stimulus props up economies. Then there’s the question of how to gain exposure to fast-growth sectors like technology and ESG without overpaying; and how to capitalise on investments with scope to grow in a post-Covid environment.
We’ve also crunched the numbers to identify our two favourite global equities funds for Ireland-based investors in 2021.
This might all sound great in theory, but how does it look in practice? We’ve taken a look at how €20,000 invested a year ago in our 2020 selections performed here.
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.
For new investors, we’re sticking with our 2018, 2019 and 2020 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 (57%), bonds (31%), alternative assets (7%), and property (5%).
Prisma 4 is also spread over the globe. 61% of the fund is invested in the US and Canada, 20% in Europe, 10% in Japan, and 5% in Asia-Pacific and South America.
And importantly, it has a track record of decent returns. In 2019, it grew by 6.5%, as Zurich’s fund managers played a smart game of switching back into equities after the market sell-off in March.
In the five years to December 2020, this fund has returned more than 44% total growth as this chart shows.
In fact, Zurich Prisma 4’s performance is substantially better than comparable funds from its competitors, Aviva, Irish Life, New Ireland, and Standard Life over the last three and the last five years.
Here’s a comparison:
For contrast, your money in the bank has earned about 0.5% in interest during the same period.
As a runner-up, Irish Life’s MAPS 4 fund is a strong performer with 31.6% growth over the same period. But as we’ve explained elsewhere, it’s harder to invest in it on decent terms.
Best fund for larger lump sums
If you have a lump sum of around €50,000 or higher, it’s time to consider using Moneycube to build your own portfolio.
If you’re willing to handle your own tax affairs, you can open a much wider world of fund options, and significantly drive down your overall cost of investing.
We generally recommend a portfolio of at least four such funds. So it’s hard to pick a single fund in this category. But you can read about one of our favourites here. This fund more than doubled during 2020 – an extraordinary performance, even for a fund with a very strong long-term record, and helped greatly by substantial holdings in Tesla and Amazon.
You can read more about our approach to investing larger lump sums here.
Best investment for income
Investing for income has been a tough task in the last decade. With interest rates stuck on the floor, you need to own risk assets to have a real chance of growth to match the drawdown of income from your investments.
In a new entrant to our annual review, we’ve selected the Greenman Open fund.
In general, Moneycube steers away from property funds – you can read why here – but Greenman deserves a closer look if you’re seeking regular income.
Greenman is an Irish-based fund which specialises in investing in retail property in Germany. It has grown to become Germany’s largest, food retail-focused, real estate investment fund, now nudging €1 billion.
Greenman signs leases lasting decades with major German supermarkets, meaning that it has strong visibility on regular, stable income over many years.
And it pays out distributions on a quarterly basis. The target annual return is circa 5.5% net of fund charges. It’s a target they’ve met over 1, 3 and 5 years as the table shows:
Note: based on data to September 2020.
As you might imagine, Greenman’s focus on food retail really paid off in 2020. Its key tenants were essential services, insulating it from the worst effects of lockdowns.
Two of the best pure equity funds 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. We’ve selected two funds to fit this bill. One is actively managed in Dublin. The other is a pure passive solution from global leaders Vanguard.
Index investing with Vanguard
If you simply want a slice of what is going on in companies all around the world, a ready-made portfolio from Vanguard might be for you. Using this route, we’ll help you invest into four index funds, giving you exposure to the US S&P 500, and major European, Japanese, and emerging market stocks.
It’s hard to beat this approach for diversification among companies. Taken together, this portfolio holds positions in over 2,700 companies. And it has delivered average annual growth of 10.7% over the last ten years.
You can read all about Vanguard and index fund investing here.
Active management with Zurich International equity
Secondly, the local leader. We continue to like Zurich’s International equity fund 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%.
2020 was another strong year for this fund. It turned in growth of 14.7% – respectable in any year, let alone the one we just had. Sure, that’s less than the 2019 performance of 29.7%. But it’s great to see continued growth, and shows the importance of keeping your money in the market to benefit from the uplift when it comes.
The chart also shows how the fund has delivered over the long term, and has steadily recovered during mid-2020 from the Covid-induced market crash in March.
If you’d invested in this fund ten years ago, you’d have almost tripled your money, as the chart below demonstrates – a €10,000 investment would be worth around €28,000.
This fund now has almost €3 billion of Irish investors’ money, and holds shares in more than 300 companies. It’s a large fund by international measures. As 2021 begins, the managers have pulled back their position in US equities after a strong run, and instead have a great emphasis on Asia and Europe – where value stocks may see a comeback.
The fund continues to prefer technology and consumer stocks like Apple and MasterCard. Tech firms Microsoft, Alphabet/Google and Amazon are its top three holdings, and there are substantial positions in financial, consumer and industrial businesses. It also escaped some of the worst sectors for value destruction in 2020 such as oil and gas.
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 2021. Now you can get in touch, or use our online platform to design an investment plan that’s right for you.