My top 2 investment funds for the next 10 years

Mutual funds can be an important and profitable part of your investment portfolio. Whether it’s an exchange-traded fund (ETF), mutual fund, or investment trust, it can provide instant diversification. This is because they contain multiple stocks, often (but not always) in different sectors and regions.

They are also the perfect way to invest in the world’s biggest megatrends that will take place over the next decade and beyond. Here are two actively managed funds that I recommend.

Sanlam Global Artificial Intelligence Fund

The influence of AI is set to permeate every sector worldwide as its reach continues to accelerate and expand, creating attractive investment opportunities..

Hello Investment

I think that neatly sums up the opportunity to invest in artificial intelligence (AI). But there is an ever-increasing number of thematic funds and ETFs focused on AI. So why choose it Sanlam Global Artificial Intelligence Fund special?

First of all, I like that it’s not just about technology. Yes, there is a great position Alphabet and Microsoft. But also happy UnitedHealth Group and Halliburtona global leader in oilfield equipment and services.

Halliburton is up 65% over the last 12 months. So this diversified approach has certainly proven its worth, as many tech stocks have fallen in recent months.

Another interesting aspect is that the managers use a proprietary AI platform called ‘Orbit’ to identify companies they want to invest in. That fits the fund’s credo. It’s hard to argue”AI is set to permeate every sector worldwide”but not your own sector (ie, fund management).

I don’t know if this AI platform really offers fund management. But as of September, the fund’s performance has delivered an annualized return of 18% since its launch in 2017. That’s an excellent start.

One risk I see moving forward is a concentrated portfolio. It only contains 36 shares. That makes it vulnerable if two or three of the largest holdings underperform.

The ongoing fee is 0.5%.

Baillie Gifford Pacific Fund

Asia is the fastest growing region in the world due to the rising and growing export of the consumer middle class. That growth is expected to continue for at least the next decade. Baillie Gifford Pacific Fund it aims to invest in the largest companies in Asia-Pacific (excluding Japan).

The top holdings of the fund include India Reliance Industries, Taiwan Semiconductor Manufacturing Companyand Samsung. About 34% of the funds are in China, while about 20% are allocated to India. Vietnam, which has benefited from the manufacturing exodus from China, is also represented.

Again, I like that the portfolio is diversified across different sectors. It has an Indonesian base Freedom Copper Gold and Chinese oil giants CNOOC.

One big risk I see here is rising geopolitical tensions between the US and China. Any further deterioration in relations could dampen investor appetite for Chinese stocks, which could hurt the fund’s overall performance.

Finally, I see the fund’s ongoing 0.76% fee as reasonable given the long-term growth opportunities.

If I don’t already have the stock Pacific Horizon Investment Trust (which is also run by Baillie Gifford and has many similar holdings), I bought this fund. But I want to invest in Sanlam Global Artificial Intelligence Fund in early 2023.