My hand-picked portfolio of eight funds I’d recommend to EVERY investor: JEFF

Over the years, I’ve toned down my approach to investing. I’m now less gung-ho and more considered. A Steady Eddie rather than an investor version of Lando Norris.

Maybe, it’s an age thing – I’m now in my 60s and I’ve become slightly more risk-averse. Maybe a recent costly divorce, resulting in the loss of my much-loved self-invested personal pension, has caused a rethink.

But I’m not sure these are the main reasons why I’m now a more conservative investor. I think it’s because I have finally found my investment comfort zone in a pool of investments which tick all my boxes.

This pool comprises investment funds and stock market-listed investment trusts – vehicles run by professional managers with the underlying assets across numerous holdings.

There are other common characteristics. They are all invested in equities, so there is no exposure to bonds, infrastructure or green energy projects. More importantly, they all deliver a stream of income, in some cases a drip-feed of growing income.

For me, income is the elixir that makes long-term investing so worthwhile. It’s your reward for patience and sticking with investments when markets cut up rough.

Of course, you don’t have to take the income: you can reinvest it as most people do, especially if they are building a portfolio with retirement in mind. But whatever ticks your box, income is a vital ingredient in the mix. 

With all this in mind, I’m sharing with you the portfolio of eight investment funds that I have put together which embrace all the characteristics I’ve just mentioned. It’s equity-based, broadly invested, and each fund has a commitment to paying investors a regular income.

Bar one, they are funds I’ve invested in at various stages in my journey. I would be comfortable recommending them to my sons as super investments to include in Junior Isas (Jisas) for their children – and to the increasing number of people running investment portfolios well into retirement.

The eight are meant to fit like a jigsaw, giving investors broad exposure to both UK and overseas stock markets. But you can pick and mix: the choice is yours.

They are ideal to hold in an Isa, a self-invested personal pension or a Jisa because of the tax-wrapper these three products all provide investors with.

These wrappers will become increasingly important as Labour continues to increase taxes on dividends earned outside of a pension or Isa (they ratchet up next April), and imposes higher taxes on capital gains.

The portfolio will work for you irrespective of whether you can only afford to invest a modest amount every month – regular investing makes great sense.

The key – and this is crucial – is to view it as a long-term investment. That means staying with it for at least ten years, preferably longer. And not being shaken when markets correct, as they do from time to time.

UK 

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What this £1.4billion trust offers is exposure to the UK stock market with a twist – and a delectable rising income on top. The twist is provided by around a fifth of its assets being invested in an unlisted business, Independent Professional Services.

This provider of trustee services to companies and pensions generates a big slice of the trust’s revenue which is used to pay investors their dividends.

The remaining 80 per cent of assets are invested in UK equities by James Henderson and Laura Foll, fund managers at Janus Henderson – with the emphasis on identifying the quality companies that the market is currently undervaluing.

This hybrid trust is unique, but in terms of investor outcomes, it delivers in spades.

On the income front, it has grown its dividend (paid quarterly) for 15 years while either growing or maintaining it for 46.

In July this year, the trust’s chief executive Denis Jackson said that a focus on providing a ‘regular and reliable income’ remained a priority.

Fifteen and 46 will become 16 and 47 in the new year, when the trust declares its final quarterly divi for the financial year ending December 31.

So far this year, it has paid divis totalling 25.125p a share compared with 24p over the same period in 2024. The annual dividend yield is around 3.2 per cent.

In terms of total return, it has outperformed the FTSE All-Share Index over the past three, five and ten years. For example, respective five-year returns are 95 and 72 per cent. Total annual charges are competitive at 0.54 per cent and the shares are currently trading at around £10.50. The FTSE 250-listed trust has a stock market ticker of LWDB and an identification code of 3142921.

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