Monday, 23 July 2012

Spotlight on the Best Equity Funds

In this post we take a closer look at the current best equity funds available. All these funds have expected returns of over 7% a year.

When selecting an equity fund it's important to take a look at the holdings of the fund to ensure our overall portfolio isn't too heavily geared toward any one sector or exposed to sectors we deem too risky.

The chart below shows the sector breakdown of the best funds currently available:

As you can see some funds are concentrated in different sectors. China, Australia, Poland and Spain are fairly weighted towards the financial sector which could limit their appeal to some investors. Taiwan is heavy on technology (c. 60%).

Another thing to consider is the size of the market. Investing in smaller markets carries greater risks. The chart below shows the relative sizes of the above markets:

Investing in smaller markets such as Poland or New Zealand would only be wise if there was an attractive premium above the estimated returns on larger markets.

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