- Funds can provide people with an easy way to start investing
- Why it’s never too late to start your investing journey
- The benefits of global equity tracker funds
- The role of bond funds in a portfolio
- How multi-asset funds work and why they’re growing in popularity
Dan Coatsworth, head of markets at AJ Bell, comments:
“Investing doesn’t have to be complicated when you use funds, and you’re never too old to get started. There are some easy steps for anyone whose interest has been piqued by the government’s push to get more people investing their money rather than letting it sit in cash.
“A lot of people feel overwhelmed when looking for investments because the choice is vast. Rather than throwing a dart at the investment universe to randomly select something, there’s an obvious starting point.
Why start with funds?
“Beginning with funds rather than shares is a much simpler way to begin your investment journey as you won’t need to spend hours researching individual companies. A lot of people don’t know where to start with reading company accounts, and who can blame them? We’re not all numbers experts, but that doesn’t mean investing is beyond reach.
“Investing is for everyone, and tracker funds can be ideal stepping stones. They are typically low cost, and they simply mirror a part of the market rather than using a fund manager to try and outperform.
“Funds offer instant diversification which means you spread your risks across multiple underlying holdings, rather than betting everything on one name. If one of the fund holdings experiences a setback, hopefully the other names in the fund portfolio should pick up the slack and minimise the damage.
“It’s worth noting that many people will already be investing, even if they don’t realise it. That’s down to auto-enrolment into workplace pension schemes. The money you pay into your pension, alongside employer contributions and tax relief from the government, will be invested in the markets.
“This money is locked away until you retire, whereas any money you invest yourself in an ISA or dealing account can be accessed whenever you need it. The exception is a Lifetime ISA where you pay a penalty charge if you’re not using the money to buy a first home worth £450,000 or less, or if you’re younger than age 60.”
1. Global equity tracker funds
“Global equity tracker funds are the natural starting point for a new investor as you’re not making a call on a specific industry or part of the world.
“These funds provide low-cost exposure to companies around the world, with representation from a wide range of sectors. It’s like buying an assorted box of biscuits – you get lots of different varieties inside a single tin, and they provide a broad range of flavours. There’s something inside to please everyone.
“Global equity tracker funds typically follow one of the following indices: MSCI World, MSCI All Country World, FTSE World or FTSE Developed World. They’re designed to mirror the performance of the relevant index – so if the MSCI World goes up 5% in a month, the relevant tracker fund should do the same. In a year, the tracker fund will lag by a tiny amount which equals the built-in management charge.
“While any of those four indices will provide broad exposure to stocks around the world, there are subtle differences. For example, MSCI World and FTSE Developed World indices capture large and medium-sized businesses in developed markets. MSCI All Country World (ACWI) and FTSE World indices include emerging markets alongside developed markets.
“Over the past 10 years the performance difference between a global equity fund tracking just developed markets and one focused on both developed and emerging markets was only marginal. For example, Fidelity Index World returned 243% in pounds sterling versus 226% from iShares ACWI ETF, respectively*.”
*Source: FE Analytics. Data to 12 April 2026.
2. Global bond tracker funds
“Bond funds are ideal for someone who wants to dial down the risk they’re taking. Equity funds contain shares and are considered higher risk, even though they might have a diverse portfolio. Bonds are lower-risk and more cautious investors might want to have some of their money in this asset class to help cushion the blow of any stock market sell-off.
“When shares fall, bonds often fall less and recover faster, helping to smooth the overall investment journey. That might suit someone in their 40s or early 50s approaching retirement, those already in retirement, or more anxious individuals. They don’t guarantee to protect your money, but they can have defensive qualities.
“Bond funds typically come in one of three shapes – they invest in corporate bonds, government bonds or a mixture of the two, known as strategic bond funds. Corporate bonds are issued by companies who want to borrow money – they pay interest to the investor twice a year and return the face value of the bond at the end of a pre-agreed period. Government bonds work in the same way.
“The risk for bonds is the issuer failing to make the interest payments and buy back the bond at the end. There is a different risk of this scenario playing out depending on the type of bond. For example, developed market government bonds are typically seen as much lower risk as it’s extremely unlikely that the government issuer will be unable to pay out.
“Bonds are also heavily influenced by interest rate expectations and can underperform when rates are expected to go up. Investment-grade bonds are typically lower risk than other types of bonds, often called junk bonds.”
3. Multi-asset funds
“Some people are happy to buy separate equity funds and bond funds, yet a multi-asset fund combines both elements in a single product which brings convenience and simplicity to a portfolio. This is the reason why they’re often called ‘all-in-one’ funds.
“They are growing in popularity as inexperienced investors seek easy solutions, and more experienced investors want an easy life.
“Multi-asset funds come in different shapes and sizes, where you can decide the level of risk to take. For example, you can sometimes get versions that come in 100%, 80%, 60%, 40% or 20% equity, with the remainder held in bonds.
“The more cautious you are, the greater the proportion you might want in bonds. However, there’s such a thing as being too cautious. Those with time to ride out the ups and downs of the stock market might want to avoid having too much in bonds as a proportion of their overall portfolio given the returns might be much lower than a more equity-weighted portfolio.”
