Best investment funds for beginners in the UK

By Darius McDermott on 17 December 2025 in UK, Basics

Starting an investment journey can seem daunting for beginners. Where should they put their money? Will they be taking a lot of risks? How can they choose which assets to buy?

That’s why so many choose an investment fund. These financial products pool money from multiple individuals and use it to build a diversified portfolio. This approach can spread the risk across asset classes and individual positions, making it ideal for individuals who are unsure about where to invest their money.

In this article, we explore the best investment funds for beginners, the common mistakes to avoid, and how FundCalibre can help you make the right calls. We’ll also cover the importance of investing for at least five years and suggest three simple starter pathways – and how to choose between them. Of course, no investment is risk free. The value of your holdings can fluctuate, which is why it’s crucial that you never commit what you can’t realistically afford to lose.

How beginners should choose a first fund

Start with your investment objectives. What are you hoping to achieve? For example, are you seeking an additional revenue stream or aiming to build a substantial retirement fund?

It will also depend on your investment time horizon. Will you need to hit a particular target within a set period, or is it open-ended? Have you also got an emergency fund of money set aside?

You should also consider how much risk you’re willing to take. Are you happy to accept volatility in the pursuit of higher returns, or does the thought give you sleepless nights?

The most suitable fund for you will depend on a combination of your aims, investment horizon, and attitude to risk. The good news is that there are plenty of options, regardless of your situation. Investors seeking growth may prefer to invest in an emerging market fund that offers the prospect of enhanced returns in exchange for higher risk. Conversely, if they are concerned about losing money and want to make steady gains, a fixed-income fund or a diversified global portfolio.

Fund types that work well for beginners

A lower-risk fund is probably the best option for beginners, and these can come in various shapes and sizes. We believe there are three approaches that are worth considering:

• Multi-asset funds
• Global equity funds
• Short-duration bond or money market funds.

Let’s look at each in turn.

One-fund, multi-asset “all-in-one” options

Some of the best beginner-friendly funds are diversified portfolios that provide exposure to a broad range of asset classes, including equities, fixed income, and property. The idea is that these funds will spread your risk. Therefore, should equity markets take a tumble, the hope is that fixed income will perform well.

Multi-asset portfolios are available for different risk appetites. Their structure will be determined by the percentage of their assets held in equities. As the name suggests, the IA Mixed Investment 0-35% Shares sector is for funds that hold up to 35% in equities. There is also the IA Mixed Investment 20-60% shares sector, the IA Mixed Investment 40-85% shares sector, and the IA Flexible Investment, which has no minimum or maximum levels.

Broad global equity funds

New investors might also find a global equity fund an attractive option. These funds rely on skilled managers to select companies they believe can outperform the wider market. Rather than simply matching an index, these actively-managed funds aim to deliver superior long-term returns by identifying quality businesses, spotting emerging opportunities, and avoiding weaker areas of the market.

At FundCalibre, we support active funds because great managers can add meaningful value, especially in less efficient areas of global markets where careful research and conviction-driven decisions can make a real difference. Active funds also offer greater flexibility: managers can adjust positioning during market stress, manage risk more dynamically, and pursue long-term themes that aren’t captured fully by broad indices.

The trade-off is higher fees and the possibility of underperformance, but for investors seeking the potential for better-than-market results and a more tailored approach, high-quality global active funds can be a compelling first choice.

Short-duration bond or money market funds

These are also low-risk funds for UK beginners that invest in short-term debt, typically offering higher returns than a bank account. Short-duration strategies are often used by investors who are concerned about near-term interest rate movements and rising or volatile yields. They can often produce returns that are not only less correlated with traditional bond markets but also have the potential to benefit from inflation, as well as hedge downside risk.

Money market funds, meanwhile, invest their money in high-quality, short-term debt issued by governments and companies. Their aim is to provide returns that are slightly higher than cash. According to BlackRock, they’re investment solutions for your cash which are designed to offer “portfolio diversification and liquidity”.

Three beginner-friendly “pick-a-path” examples

Here are three mixed investment portfolios that are among the best funds for UK beginners with varying risk appetites.

The Schroder Global Multi-Asset Cautious Portfolio, co-managed by Philip Chandler and Tara Fitzpatrick, is in the IA Mixed Investment 0-35% Shares sector. We believe this should be a strong consideration for any investor seeking a cost-competitive, active solution with a focus on risk.

For those wanting more equity exposure, the M&G Income and Growth fund is an option in the IA Mixed Investment 20-60% Shares sector. This fund invests directly in individual stocks and bonds, while the property exposure is achieved by investing in specialist funds.

Then there’s the BNY Mellon Multi-Asset Income fund for investors seeking a portfolio in the IA Mixed Investment 40-85% Shares sector. It aims to achieve a balance between income and capital growth over a period of at least five years. It predominantly invests in global equities but also has an allocation to bonds.

Fees, in real money, for beginners

Fees can significantly impact your returns. Take, for example, investing £100 per month into a fund via an investment platform. This would be £1,200 for the year, and if the fund has an ongoing charges figure (OCF) of 0.2% then this means £2.40 will be spent on fees. Add the platform charge of 0.3%, which equates to £3.60, and that brings the total amount paid out to £6. However, let’s look at what happens if the OCF is 0.8%. In that scenario, the annual fee will rise to £9.60, and once you add in the £3.60 platform charge, the overall cost is £13.20. That’s why it’s vital to know how much you’ll pay.

ISA or pension for your first fund

Individual Savings Accounts (ISA) and pensions are both sensible, tax-efficient vehicles that should be considered by most investors. Whether an ISA or a pension is most suitable will depend on your circumstances, investment objectives and what you already have in place.

An ISA offers flexibility: you can withdraw money whenever you like, there’s no tax on gains or income, and you have an annual allowance to use each tax year. This makes it ideal if you want accessible long-term investing.

A pension, by contrast, is designed specifically for retirement. Contributions benefit from valuable tax relief, meaning the government boosts what you put in, and investments grow tax efficiently. The trade-off is that your money is tied up until the minimum pension age.

For many beginners, the right choice may be both: a pension for long-term wealth building and an ISA for flexible investing. The key is understanding your time horizon, your need for access, and how the tax advantages of each wrapper support your financial goals.

Common beginner mistakes (and easy fixes)

1. Not being clear on goals – This can result in your return profile being wildly different from what you’d anticipated. Ensure you know what you want to achieve and select the funds most likely to help you achieve it.
2. Chasing last year’s winners – Just because a fund did well last year doesn’t guarantee a repeat performance. Base your investment decisions on your objectives and fund research.
3. Overlooking fees – Fees can add up over time, so make sure you know exactly how much a fund and platform will charge you – and whether there are more cost-effective alternatives.
4. Failing to monitor – Funds can underperform – and you will be setting yourself up for failure if you don’t spot it early enough and make the necessary changes.

Step-by-step: buy your first fund in 20 minutes

Here is our five-point guide to finding the best funds for UK beginners.

Step 1: Ensure you have an emergency fund in cash and clearly define your financial goals.

Step 2: Decide whether a cautious, balanced or growth profile is most suitable.

Step 3: Check the fees of prospective funds and read the factsheets.

Step 4: Pick a wrapper. Do you want to hold them in an ISA or a pension?

Step 5: Start small. Consider making monthly contributions – and review this stance in a year.

Where FundCalibre helps

FundCalibre helps you select the right funds by using its expertise to highlight the best portfolios within various sectors. Our experts analyse these portfolios and then whittle the investment universe down to a preferred list of 200 funds. This will give you an idea of the funds that we believe are best-in-class within various sectors and are worth considering, with clear information to help you make decisions.

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