Important information - the value of investments and the income from them, can go down as well as up, so you may get back less than you invest.
Here we are again. Fund picks time. First, I’ll review last year’s recommendations, then a quick look back to the picks that have been running for at least five years (those from 2016 through to 2021) and then I’ll set out where I’ll be investing for 2026.
Of course, picking funds is not a ‘once and done’ event. And I would draw your attention to a couple of other pieces I wrote last year in which I proposed some further fund ideas.
Back in February, I expanded my four 2025 picks to a Ten for 10 list in which I named ten funds that I intended to buy and hold for the first decade of my retirement (when it comes!).
I followed that up in September with Six Steady Eddies for a Stress Free Retirement, a subset of the ten that I think should offer a smoother ride.
There’s a lot of overlap between these lists, which is not surprising. There is a limited number of excellent funds - fortunately we do not need many to build a well-balanced portfolio.
Keeping it simple
I have learned a few things over the ten years or so that I have been producing these recommendations. The most important lesson for me is to keep it simple. The best performers have tended to be the funds with the broadest investment universes from which to pick.
This was certainly the case last year.
The two global funds I recommended last year - Dodge & Cox Worldwide Global Stock and Fidelity Global Dividend - both delivered a satisfactory performance. Better than the performance of the US market, less good than some of the other markets around the world. That is what you would hope for from a fund with a global remit, although I will put my hand up and admit that a slightly better performance could have been achieved by investing in a global tracker fund last year. Index funds have had a good run recently but that will not always be the case, so I am relaxed about this modest underperformance.
The other two recommendations a year ago confirm the merit of keeping it simple. I picked Brown Advisory US Smaller Companies in anticipation of Donald Trump’s America First mantra being good for domestically focused US companies. The reality is that the price of tariffs has been borne to a large extent by US consumers. I got that wrong and this fund is modestly underwater.
The final pick - International Public Partnerships - was a play on the UK government’s desire to encourage investment in UK infrastructure to boost domestic productivity. This is a long-term challenge, and a year is a short time in the markets. But the fund did make progress last year and it remains very appealing in terms of its discount to net assets and its dividend yield.
I’m very happy to stick with all four of last year’s picks. And indeed, a second lesson I have learned over the years is that holding onto investments often pays off. Some of the best returns have not been in the year immediately following a recommendation but subsequently.
Investing for the long run
Which is a good segue into a look back at my picks from 2016 to 2021. Overall, I’m reasonably satisfied with the picks. They have broadly kept pace with a rising market over most of that period.
However, my main conclusion is that it is really hard to beat the market. Some managers have done it fairly consistently, but picking those ahead of time is difficult. It is yet another argument for diversification. You really want to have the likes of Rathbone Global Opportunities and Fidelity Special Situations in your portfolio of funds but achieving that is only possible, realistically, by accepting a few also rans along the way.
2016 - hello James Thomson
2016 was the first year of my annual fund picks (as far as I can remember) and it was the year that I first recommended Rathbone Global Opportunities. I’m very glad that I did and I only wish I’d invested more along the way.
(full disclosure: we also recommended the Ignis UK Property Feeder in 2016, but this fund has changed hands several times and I haven’t been able to track its performance in its various guises - if anyone can help, do let me know!)
2017 - Ian Heslop’s quantitative approach
In 2017 we kept the faith with Rathbones but were also persuaded by the mathematical modelling of Jupiter Merian’s Ian Heslop. This has been a great example of how a pick can do moderately well to start with but then reward patience over the long haul.
2018 - Jeremy Podger’s global remit
From 2018 until his retirement a couple of years ago, I had lots of interesting conversations with Jeremy Podger, manager of Fidelity’s Global Special Situations Fund, the spin-off fund from Anthony Bolton’s successful Special Situations franchise. Jeremy is a much-missed source of market wisdom, and he led the pack in this year’s picks.
2019 - welcome aboard Dan Roberts
I had been an investor in Dan Roberts’s Fidelity Global Dividend Fund more or less since its inception in 2012. However, it wasn’t until 2019 that it made it into my annual fund picks. It has been a great success in the years since then and continues to be my largest personal fund holding.
2020 - the power of diversification
At the start of 2020, we were blissfully unaware of what lay around the corner in the form of the Covid pandemic. The year got off to a brutal start and we were really only back to square one by the end of the first 12 months. That year’s picks show how patience can pay off. The Artemis emerging markets fund has taken off this year. It was a long wait but it has rewarded the buy and hold investor.
2021 - hedging your bets
This is the last year of picks that have now had at least five years to run. And it is the first year to really have a disappointment. Infrastructure should be a good diversifier but rising interest rates in 2022 hit the fund hard and it has not recovered.
On the positive side, 2021 saw the first recommendation of Fidelity Special Situations, run by Alex Wright. Another slow burn, this fund has really taken off in the past couple of years. And having a good range of funds this year diluted the impact of the one loss-maker.
The magic of diversification is, therefore, my third lesson from this review. When I look at the performance of my Ten for 10 recommendations, the power of a balanced portfolio of funds becomes clear. The range of returns is from plus 41% down to minus 8%. And three of the ten have delivered more than 20% since last February. Six have provided double digit gains.
Here’s how the Ten for 10 portfolio has fared in its first 11 months. A promising start.
This year’s picks
After a third year of strong returns in markets, there are reasons to be both cautious and optimistic as we move into 2026.
The good news is that corporate earnings, the main driver of stock market returns over time, are looking robust. After dipping around the time of the tariff announcement in April, earnings growth expectations are back into double digits for both this year and next. Policy, both fiscal and monetary, looks likely to be supportive this year.
The less good news is that there is growing evidence of a slowdown in labour markets on both sides of the Atlantic. Inflation remains a persistent concern. And the geo-political outlook is as uncertain as ever.
I expect the rotation that we began to see last year out of the US and into other markets all around the world will continue. In particular, markets that are supported by attractive valuations such as the UK will be popular with investors looking to diversify away from the more expensive US technology sector. I think downward pressure on the dollar will continue to provide a tailwind to emerging markets.
Dodge & Cox Worldwide Global Stock
I am not averse to repeating recommendations. I did it last year with Fidelity Global Dividend (which I still like).
This year’s repeat pick is a global fund with a value bias that will benefit from the rotation away from the US. The Dodge & Cox Worldwide Global Stock Fund has around 50% of its assets in the US, well below a neutral weighting.
This fund, which has delivered well for us in recent years, benefits from experienced analysts and a disciplined bottom-up stock picking process which is applied consistently through a range of market conditions. The fund has a good valuation discipline but is pragmatic in its value approach. It prefers a fair company at a good price to a good company at a fair price. This means it can own companies with growth characteristics that appear cheap as well as more deep value, contrarian ideas.
Its top four holdings illustrate the range of its holdings both in terms of geography and sector: Taiwan Semiconductor, GSK, Alphabet and Charles Schwab.
Fidelity Special Situations
My second pick for 2026 is a fund that will be familiar to many Fidelity investors. Special Situations has been a staple investment in many portfolios over the years, dating back to Anthony Bolton’s long tenure managing the fund.
Alex Wright has carried the torch forward with great skill in recent years and he has enjoyed a particularly strong run since the pandemic. He is a seasoned investor, supported by a high-quality pool of analysts.
The approach of the fund is contrarian and invests broadly across the market cap spectrum. There is a clear value bias, which is an advantage in a period when investors seem to be rotating away from highly priced growth shares. Although largely a UK fund, Wright can allocate up to 20% away from the home market.
What is impressive about this fund is its ability to deliver performance even when its style is out of favour. It suggests real stock picking skill. Historically, Special Situations has performed well in post-bubble markets such as the 2000-2003 period, and that provides some reassurance in the current market situation.
Valuation is a key driver of returns in the long run and the UK is one of the cheapest stock markets in the world today. There may be good reasons to worry about the UK economy, but this is more than reflected in its price.
- More on Fidelity Special Situations Fund
Lazard Emerging Markets
My final pick is a fund that has become a significant part of my personal portfolio over the past year. Emerging markets were the top performing equity investment in 2025, and I believe they will continue to enjoy tailwinds in the year ahead.
There is a long-term case to be made for investing in regions of the world where growing wealth and positive demographics are driving higher economic growth than in the developed world. But there is also a shorter-term case focused on the likely weakness of the dollar, which tends to be associated with stronger performance from emerging market shares.
Lazard Emerging Markets Fund is managed by a long-standing, experienced manager who has remained true to his style despite an extended period of style headwinds. James Donald is backed by an experienced and stable team. This is important for a global emerging markets manager because regional markets can be idiosyncratic, and companies are not always directly comparable to their developed market peers.
The investment approach of the fund is strong, with a methodical portfolio construction process and good risk management. When you consider the potential for volatility in this asset class, the performance of the fund has been reassuringly smooth over the years.
Stay tuned
Well, that’s it for this year’s picks. Watch out for my new Investment Outlook, which provides the market context for these recommendations. It will be published next week.
And a week later do join us for our first live-streamed investment forum of the year. I’ll be joined on stage in our Cannon Street office by Niamh Brodie-Machura, Fidelity’s chief investment officer for equities. You’ll also have the chance to hear from Alex Wright, manager of Fidelity Special Situations, and James Donald, who runs Lazard Emerging Markets.
Got a burning question you want to ask? Why not drop us a line. Click here to ask your question.
Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Before investing into a fund, please read the relevant key information document which contains important information about the fund. For full five year performance figures please refer to the fund’s factsheet. Eligibility to invest in a SIPP or ISA and tax treatment depends on personal circumstances and all tax rules may change in the future. Withdrawals from a SIPP will not normally be possible until you reach age 55 (57 from 2028). Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Shares in the International Public Partnerships investment trust are listed on the London Stock Exchange and their price is affected by supply and demand. The trust can gain additional exposure to the market, known as gearing, potentially increasing volatility. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.
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