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Are these three funds too risky for me?

4 minute read

We take a look at three ‘higher risk’ investment funds, for a more adventurous investor looking to dip their toes in these very specific parts of the market.

Who's it for? All investors

It’s a given that in order to meet your financial goals, you need to take some risks. Take too much risk and you could end up losing money. But not taking enough risk could mean you are unable to meet your financial goals. The answer is to diversify your investment portfolio.

Taking a diversified approach means that if one or more of your investments rise you will benefit but, if they fall, there should be a degree of protection because, hopefully, some of your other holdings in different asset classes will be going up in value. However, diversifying doesn’t mean shortening the period of time you invest over. You should be thinking long term (at least five years) for all your investment allocations.

What is a higher risk fund?

There are many definitions of what ‘risk’ is. And every investor has their own view on risk. For some, it is the risk of losing all your money, for some it is simply seeing the value of your investment fall in the short term, and for others, it is the risk that your investment portfolio will not meet your long-term financial goals.

For the purposes of what we are discussing today, we define a high risk investment fund as one that invests in just one small part of the global stock market. As a result, this means it would be more vulnerable to the ups and downs of that one market. But the flipside is that the fund could do well if that market rallies. However, higher risk does not always mean higher returns. And we must remind ourselves that all investments carry a degree of risk.

We take a look at three of these ‘higher risk’ investment funds, all three of which are part of the Barclays Funds List. What all three funds have in common is that they are managed by experienced and talented teams. And this is extremely important, if you are looking to dip your toes into these specifics parts of the market.

Polar Capital Global Technology Fund

The aim of the fund is to deliver long-term capital growth by investing in technology companies and/or companies where technology is a fundamental part of their operations. But what differentiates the approach at Polar Capital from other funds is their focus on the ‘next generation of winners’. The team are looking to avoid the ‘legacy’ technology companies and seek out those companies which are growing their earnings at a considerably higher rate than the market average. And the team does this by identifying overarching themes which are in their growth phase, such as cybersecurity, cloud computing, and digital payments.

The focus on future growth and ‘next generation winners’ has been at the heart of this fund for many years and is responsible for its success. The team has successfully been able to navigate the fund through over 10 years of accelerating change within the technology market, as new technologies and factors disrupt virtually every industry and market across the globe. The dedicated focus at Polar Capital has resulted in the creation of a very experienced and management team, backed up by a strong and stable team of research analysts.

Jupiter UK Smaller Companies Fund

Investing in smaller companies can be a volatile ride, but the potential can be rewarding. Smaller companies are often regarded as the large companies of tomorrow. Identifying them early in their life can be very profitable, but the time it takes for these companies to succeed can be long.

There are over 2,000 companies listed on the London Stock Exchange. Some of them are far too big to be called small companies, yet some of them are far too small to invest in. What you are looking for is that ‘sweet spot’ of small sized companies which offer the greatest investment potential. In this environment, it makes sense to gain exposure through an actively managed fund, such as the Jupiter UK Smaller Companies Fund. Jupiter has one of the largest teams that research and cover small and medium sized UK companies, which gives them an unparalleled depth of knowledge and experience in this market.

Franklin India Fund

India is currently going through a period of extremely rapid progress, which it seems is set to continue. Go back 20 years, and only 60% of the population had electricity, against 95% today1. And the use of nuclear and hydroelectric generation in this ramp up, means that India is set to surpass its carbon emissions target set out in the Paris Agreement. This is all part of the government’s policy on providing basic facilities to its citizens, which includes the provision of a bank account. 99% of households in India today have a bank account, compared to just 58% ten years ago2.

With advances in living come investment opportunities. And none is more obvious than what we are witnessing in the online market. India has over 500 million active internet users, 70% of whom are daily users3. But online shopping in India is virtually non-existent. Fund managers are looking at this area as one of many opportunities in India with the potential to grow exponentially over the next few years. One of those managers is the team behind the Franklin India Fund.

Too risky for me?

Investing in a higher risk fund is not an alternative to investing in a diversified portfolio. But by investing just a small part of your overall investment portfolio into a higher risk fund reduces the impact if that fund does not perform. These three funds could appeal to a more adventurous investor.

But there are plenty of other areas to invest in and funds to choose from on the Barclays Funds List.  Find out more information on these funds.

To diversify your investment, you may like to consider our own Barclays Ready-Made Investments (RMI). The RMI are just one example of a range of diversified funds which allow you to select the level of risk you are most comfortable with. These multi-asset funds invest in passive funds across a range of asset classes and regions, offering a globally diversified one-stop solution for investors. Ready-made Investments are not the only funds that we offer and they won’t be appropriate for everyone.

Past performance of the fund and its manager are not a reliable indicator of their future performance.

We don’t offer personal investment advice so if you’re unsure you should seek that independently.

Funds are designed for the long term so you should only consider them if you can stay invested for at least five years.

These are our current opinions but the future, as ever, is uncertain and outcomes may differ.

Plan & Invest is a service which creates and manages a personalised Investment Plan just for you. Whether your long-term goal is your child’s university education, retirement or just building a nest egg, all you have to do is tell us a bit about yourself and then, if your application is successful and you’re ready to invest, let our experts select and manage your investments (minimum investment is £5000).

Read the Assessment of Value report [PDF, 683KB] for funds run by Barclays.

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