What are my investment choices on the AJ Bell platform?

Whether you’re looking to invest in one of your favourite companies or wanting to put money into a fund that holds stocks from around the world, there are plenty of investment choices on the AJ Bell platform.

From shares in technology companies powering the devices or systems you use every day, bonds which pay out a regular income, or investment trusts which provide exposure to themes such as renewable energy or property, there really is something for everyone on the platform.

Over the next five minutes, I’ll discuss what’s available, how each type of investment works, and where they might sit in a portfolio.

Let’s start with funds. Think of them as an assorted box of biscuits – you buy one product, but inside the box are lots of different things. For example, a UK equity fund might contain holdings in 100 different companies whose shares trade on the London Stock Exchange.  

The beauty of funds is that they typically give you instant diversification. So, if one of the companies in the portfolio goes through a bad patch, the other holdings can act as a cushion to help dampen the blow.

There are more than 2,000 funds available on the AJ Bell platform covering different markets, sectors or asset classes. Do you just want exposure to the US? That’s possible. Or perhaps you want a fund that just invests in gold miners? That’s also possible.

If you want to narrow down your options, why not look at AJ Bell’s favourite funds list, or leave the hard work to us with one of AJ Bell’s own funds.

You might be thinking about the role of funds in an investment portfolio. Funds are often seen as core investments for an ISA or SIPP because of their diversification benefits.

Investment trusts work in a similar way to a fund as they also consist of a portfolio of assets.

Where investment trusts differ to funds is that they trade on the stock market which means their price can move up or down throughout the day. You can view live prices for UK listed shares on the AJ Bell website within your portfolio page.  

Often it is possible to buy an investment trust for less than the value of its underlying portfolio, and sometimes you have to pay more than they’re worth if the trust is in hot demand. In contrast, funds are only priced once a day and they trade in line with the value of their assets.

You can choose from more than 450 investment trusts on the AJ Bell platform, such as ones that invest in Asia or North America, or specific parts of the investment universe such as infrastructure or biotechnology.

Fund managers decide what goes inside a fund or investment trust portfolio, and they also decide when something should be sold from it. You pay a small fee for this service.

One alternative is to use tracker funds or exchange-traded funds, which are also called ETFs. Typically, the fee is much lower because these types of funds are trying to mirror the performance of a specific basket of assets. Each tracker fund or ETF follows a certain index such as the FTSE 100 or the S&P 500.

You might wonder why the fees are typically lower. That’s because there isn’t a fund manager’s salary to pay, as what goes in and out of the portfolio is dictated by what’s inside the relevant index.

Funds and investment trusts try to beat the market, whereas tracker funds and ETF simply try to follow the market. For some investors, matching the market is enough and they like the fact that fees are typically lower. Others are happy to pay a bit more if it means they have a chance of outperforming the market. Just remember there is no guarantee that will happen.

Some investors like to have only ETFs or tracker funds in their portfolio – others like to mix and match with actively-managed funds or even individual company shares.

If you have confidence in being able to pick the right stocks and shares, AJ Bell offers access to hundreds of companies listed around the world including the UK, US, Canada and major European markets.

A share is just what is says on the tin – it’s part ownership of a business. Investors are rewarded by the value of the company going up or any dividend payments paid to them.

Other investments available on the AJ Bell platform include bonds which are issued by governments or companies as a way of borrowing money.

The bond issuers receive money in exchange for paying regular interest payments to the investor known as coupons and paying back the original value of the bond after a pre-determined period. Gilts fall under this category as that’s the term to describe bonds issued by the UK government.

You can also deal in warrants, covered warrants and exchange-traded commodities. These are typically aimed at more sophisticated investors who can demonstrate their understanding, experience and knowledge of the risks involved.

More information on everything we’ve discussed in this video, take a look at the market leading investment options available on ajbell.co.uk.

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