A fully flexible way to invest
4 minute read
Investment world legend has it that the physics genius, Albert Einstein, once described the mathematical rule of ‘compounding’ – a vital ingredient for successful, long-term saving and investing – as the ‘eighth wonder of the world’. Here, we talk about a fund that aims to harness its power.
Who's it for? All investors
There are a few basic rules to investing. Buy low, sell high. Don’t take too much risk. Diversify. Pay attention to fees. Don’t follow the crowd. Never invest in anything you don’t understand. Don’t time the market. The list goes on and on. But there is one ‘secret’ to investing, that is not as well known – compounding.
The dictionary definition of the word ‘compound’ is to make something (bad) worse or something (good) better. For example, ‘The farmer’s problem is compounded by the bad weather.’ And it’s the same when it comes to investing.
Let’s say (for illustration purposes) you invest £10,000 and that investment returns 5% in its first year. That will result in a rise in value of £500.
Let’s assume the investment returns another 5%, in the second year. Not only will your initial £10,000 have risen in value by 5% but the £500 gain will also return 5%. This means your total return in year two will be £525. This compounding, of making returns on your returns, gets bigger and bigger the longer you invest for. This is why Albert Einstein reportedly once said “compound interest is the eighth wonder of the world.”
The concept of compounding lies at the heart of the Janus Henderson Global Equity Income Fund. The fund managers believe that it is possible to outperform the wider market by focusing on companies that pay out above-average dividends. By managing a portfolio of such companies, and ensuring the dividends are growing, investors should expect the majority of returns to come from those dividend payments.
Whilst investors requiring income from their investments can have the fund’s dividends paid out to them, the potential to outperform the market comes from the ability to reinvest those dividends year after year – ‘compounding’. This makes the fund suitable for investors looking for growth as well.
Janus Henderson has a very strong and established team managing global income since 2006. As part of a large global company, the team are able to make use of the research and insight from the other fund managers and analysts across the firm. This helps them identify the best investment opportunities across multiple geographical regions. We believe these resources and experience of the team are key to successfully managing a global equity income fund.
In addition to the Janus Henderson Global Equity Income Fund, there are more funds on the Barclays Funds List which invest in companies that pay dividends. Find out more information on these funds
Correct at the time of publishing.
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 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.
Read the Assessment of Value report [PDF, 3.2MB] for funds run by Barclays.
The value of investments can fall as well as rise. You may get back less than you invest. Tax rules can change and their effects on you will depend on your individual circumstances.
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