The foundation: what makes a core investment
After four decades of investing, the value of patience and steady strategy has become clear. Early mistakes—such as losing money in a high-risk Japanese warrants fund in the 1990s—taught hard but useful lessons about avoiding speculation and investment fads.
Today's approach centres on being a 'Steady Eddie' investor: holding diversified funds that deliver reliable dividend income and capital growth over time, rather than chasing quick profits or individual shares. The goal is straightforward—earn returns above cash savings rates while letting dividend reinvestment compound wealth over the long term.
Core portfolio holdings should meet several criteria: a proven track record over five and ten years, low annual charges ideally below one per cent, growing assets under management, an income focus, and a clear investment strategy from the management team.
These investments are best held in tax-efficient wrappers like stocks and shares ISAs or self-invested personal pensions, allowing dividends to be reinvested without tax drag.
Global funds for geographic diversification
Global equity exposure forms the essential base of any portfolio, given the dominance of US and Asian markets. Seven funds stand out in this category.
HSBC FTSE All-World Index tracks global stock markets with ultra-low charges of 0.13 per cent annually. This £7.3 billion fund provides exposure to the world's largest companies, including technology giants like Apple, Microsoft and Nvidia. Over five years, it delivered a 74 per cent total return, though its dividend yield sits at just 1.3 per cent.
Three investment trusts—Alliance Witan, Bankers and F&C—bring active management with impressive dividend records. All three have grown dividends annually for at least 55 years and pay quarterly. Five-year returns range from 44 per cent to 67 per cent, while ten-year gains span 188 per cent to 216 per cent. Annual charges run from 0.36 per cent to 0.51 per cent.
Alliance Witan uses multiple specialist managers globally, creating a portfolio quite different from standard index exposure. Bankers parcels assets to investment teams at Janus Henderson, while F&C employs Columbia Threadneedle teams and maintains 11 per cent in private equity.
Two actively managed income funds complete the global selection. Artemis Global Income and M&G Global Dividend focus on sustainable income generation, with respective ten-year returns of 263 per cent and 183 per cent—well ahead of the 141 per cent average for global equity income funds. M&G pays dividends quarterly and yields above 2 per cent annually.
The final global choice, Templeton Emerging Markets, offers differentiation through Asian market exposure, particularly South Korea, Taiwan and China. Holdings include semiconductor manufacturer TSMC and Samsung Electronics. Ten-year returns reached 246 per cent, with annual charges just under 1 per cent and a dividend of 3.25p per share.
UK funds for home market exposure
Three UK-focused funds round out the core portfolio. HSBC FTSE 100 Index tracks Britain's largest companies with minimal 0.1 per cent annual charges, delivering 122 per cent over ten years while providing strong dividend income.
Aberdeen Equity Income investment trust boasts 25 consecutive years of dividend growth and recently absorbed Aberdeen Shires. It yields close to 5 per cent with quarterly payments and charges 0.84 per cent annually. The portfolio extends beyond FTSE 100 stocks into mid-cap companies.
Jo Hambro UK Equity Income rounds out the selection with exceptional performance—146 per cent over ten years versus a 95 per cent peer average. The £2 billion fund, managed by Clive Beagles, James Lowen and Josh Herson, pays quarterly dividends yielding about 4.7 per cent with reasonable 0.73 per cent charges.
These ten funds—seven global and three UK—provide the foundation for a robust, low-maintenance portfolio built for the long haul. Investors may choose to add satellite holdings in specific sectors or themes, but these core positions offer the diversification, income and growth potential needed to build wealth steadily over the coming decade.
