Jan 2023 update: Our more recent post highlights the best investment opportunities for your money in 2023.
Welcome to Moneycube’s annual roundup of the best investments available in Ireland.
It was hard not to make money if you invested in 2021. Global stock markets rose 31.1% in Euro terms. This year looks like it will need a little more skill to navigate, as interest rate rises, global politics, and technology valuations remain under scrutiny.
Nevertheless, if you invest in a diversified and measured way – as Moneycube customers do – there will be significant opportunities for investment growth.
Remember, these funds are all available through our online platform, along with many more. But a word of warning at the start: everyone’s circumstances are different. We’d love to hear about your detailed requirements and advise you on what’s appropriate for your situation.
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. Irish bank interest rates look set to remain on the floor. We’ve seen interest rate rises in the US and UK, but so far it looks like the European Central Bank won’t raise them here until the autumn at the earliest. Preserving the real value of your money will be vital in this environment.
Then there’s the question of managing exposure to technology firms. There will be winners and losers. Some valuations have come under strong pressure as pandemic-fuelled growth stalls. But other technology companies have been much more resilient. For example, there’s been a fall of more than 10% in the Nasdaq technology index since the start of December 2021. But Apple’s share price is up 4.2%.
Finally, there’s also a need to stay the course. Investing’s a long-term game. So we’ve shared some ideas on equity funds for the long term – perhaps via a regular monthly investment.
We’ve also crunched the numbers to identify our two favourite global equities funds for Ireland-based investors in 2022.
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 2021 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 a long-standing choice. Zurich’s Prisma 4 fund is a strong option for many who want to invest money in Ireland. It gives exposure to a broad range of assets, split among equites (53%), bonds (34%), alternative assets including gold and commodities (8%), and property (5%).
Prisma 4 is also spread over the globe. 65% of the fund is invested in the US and Canada, 18% in Europe, 9% in Japan, and 3% in Asia-Pacific.
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 last five years, this fund has returned 39.7% total growth as this chart shows.
In fact, Zurich Prisma 4’s performance is substantially better than comparable funds from its competitors, 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 less than 0.4% in interest during the same period.
As a runner-up, Irish Life’s MAPS 4 fund is a strong performer with 25.2% 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 was up 9.6% in 2021, and more than doubled the previous year – 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 to invest money in Ireland for wealth preservation
It’s no secret that inflation is seriously eroding the value of your cash savings. Consumer prices rose 5.5% during 2021. In more concrete terms, a basket of shopping that would have cost you €94.77 at the start of the year would have left you no change from €100 by the end of the year.
Ruffer Investment Company is a fund that’s focused on preserving the real value of your capital. Described by its managers as the ‘alternative to alternatives’, it has not always been popular in a decade where tech stocks have ruled the markets. But it could come into its own in an inflationary environment.
Run from Edinburgh, UK, by Trinity College graduate Hamish Baillie, there are several reasons to consider Ruffer to preserve your wealth as part of an investment portfolio.
1. A true alternative
Ruffer offers exposures which are non-correlated with a typical equity and bond portfolio. Some describe it as a hedge fund. For example, gold makes up 7.7% of the fund, options 6.9%, and cash is almost 9.6%, giving the managers firepower to capitalise on opportunities.
2. Ruffer’s not afraid to be radical
In 2020/21, Ruffer moved 2.5% of its assets into Bitcoin, believing there was a major opportunity to hedge against inflation. The trade (exited by April 2021) reportedly netted £1 billion – and proves that managing money defensively does not simply mean playing it safe.
3. Focus on not losing money
Ruffer’s ultimate aim is not to lose money in any 12-month period. For the managers, relative returns are unimpressive. If markets fall 25%, losing ‘only’ 20% of your money isn’t exactly a success, they say. And they accept this can mean enduring periods of low return while others race ahead:
When markets are rising strongly, investing with Ruffer can be like riding a tractor on the motorway, plodding in the slow lane.
It’s only when the motorway sinks into boggy marshland that a tractor proves to be a wise way to travel.
– Ruffer Investment Company
While a tractor is not as exciting as a Ferrari, there is a role for an all-conditions vehicle in many investment portfolios.
You can see the consistency of Ruffer’s approach over the long term in the chart below.
Source: Ruffer Investment Company
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 13.8% 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 13.3%.
2021 was another strong year for this fund. It turned in growth of 26.1%, on top of 15.4% the year before, and 28.9% in 2019. It 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. If you’d invested in this fund ten years ago, you’d more than tripled your money, as the chart below demonstrates – a €10,000 investment would be worth around €32,900.
This fund now has over €4.5 billion of Irish investors’ money, and holds shares in more than 300 companies. It’s a large fund by international measures. As 2022 begins, the managers have pulled back their position in US equities after a strong run, and instead have a great emphasis on Japan 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 (unchanged for some time now), and there are substantial positions in financial, consumer and industrial businesses, while utility-style investments like telecoms and consumer staples are avoided.
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 to invest money in Ireland in 2022. Now you can get in touch, or use our online platform to design an investment plan that’s right for you.