Global funds like these should be the bedrock of any portfolio – but which are the best?

In financial relationships, variety adds spice.

In 2025, the need for this reassessment has been highlighted by the failure last year of the old favourite, £23.3billion Fundsmith, to match the performance of the interloper, £63.8m Nutshell Growth fund. Fundsmith, managed by the veteran Terry Smith, returned 10.7 per cent. Nutshell achieved 23.7 per cent.

Yiu and his team have been reducing stakes in the Magnificent Seven, arguing – controversially, some believe – that these titans may be overspending on AI.

Some of its top constituents are, unsurprisingly, those members of the Magnificent Seven, plus US banking leviathan JP Morgan Chase.

Fundsmith holds only Meta and Microsoft. Smith has swerved away from semi-conductor giant Nvidia, whose shares are up by nearly 27,000 per cent over the past decade.

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F&C is one of broker Interactive Investor’s two core global fund best buys. It is also one of my global fund picks.

INDEX FUND

The simplest and cheapest option can be a ‘passive’ fund where the portfolio mimics the make-up of an index.

Since its launch in 2010, Fundsmith has produced a return of 619 per cent. But its misstep in 2024 should serve as an alert even for loyal followers of this fund – and to other existing or potential investors in all global funds – that they should examine their priorities.

F&C

This £5.5billion investment trust is a route to back the Magnificent Seven, which are its most sizeable stakes. The iPhone maker Apple, the trust’s third largest holding, is now valued at around $3.7 trillion.

But while this should be a long-term relationship, every new year you should still question your commitment to a fund.

Among the fund’s other holdings are Sartorius, the German scientific equipment maker, and the payments giant Visa. This is a fund to consider if Magnificent Seven shares already figure large in your portfolio.

It would be foolish to entrust all your cash to these companies but ignoring them would also be a mistake – whatever unfolds in 2025.

Does it match your goals and the degree of risk you can afford to take? Does it promise diversification, but actually offer the opposite?

Its share price increased by 31 per cent in 2024 to $251. In late December, the broker Wedbush raised its target price for shares to $350 based on the view that ‘a golden era of growth is on the horizon in 2025 for Apple’.

Another top 10 holding is Eli Lilly, the pharma giant behind the Mounjaro and Zepbound obesity drugs. By the beginning of the next decade, global annual sales of these and other weight-loss drugs are forecast to reach $150billion.

The basic building block of a portfolio should be a global equity fund. You deposit a lump sum or contribute monthly and acquire your very own slice of the world’s starriest companies.

Interactive Investor’s best buy in this category is the iShares Core World ETF (exchange traded fund) which follows the MSCI World Index.

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