How do you judge fund recommendations? While investment websites and their popular “best buy” lists provide confident advice, the data presents a different perspective. Trustnet has been publishing yearly lists of the most talked-about funds on “best buy” lists since 2022. The results may surprise you. Only one out of every fifteen recommended funds did better than the benchmark in 2023. Also, only 3 out of 18 funds did better than the rest in 2024.
Consider these numbers carefully before investing in mutual funds. The “best-buy” portfolio made 122.23% over four years, which sounds good, but it still did worse than the MSCI All Country World Index, which made 144.77% during the same time. On a global scale, it’s even more worrying that 94% of funds did worse than their index over a five-year period. The result makes us think about how useful these “expert” suggestions really are for your investment strategy.
Expat Wealth At Work looks at why these “best buy” lists are so popular, what factors you should really consider when evaluating fund recommendations, and how to make better investment decisions based on real data instead of marketing hype.
What Makes “Best Buy” Lists So Popular?
There are thousands of investment funds, which makes it challenging for many investors to choose one. In fact, first-time investors have to choose from more than 10,000 funds, which often come with factsheets full of jargon that even seasoned investors find challenging to understand. There are so many options that “best buy” lists can thrive in this environment.
These lists are important filters that help investors narrow down their choices to a small number of options. According to the data, 70% of DIY investors use these curated lists to help them make decisions. Also, about 78% of people say they are only six out of ten confident when picking investment funds on their own.
These lists are also popular because they are simple to find. They are not final recommendations but rather starting points for research. This method gives investors a sense of control while still getting help. The investment advice gap, on the other hand, affects millions of people. This phenomenon makes these lists especially useful for people who can’t get professional advice.
Best buy lists have a big effect on fund flows, which shows how big of an effect they have on the market. Investment platforms know this psychology well: when something is called a “best buy”, people feel safer when they are with other investors. This method helps answer what is still the second most common question among investors: which product or investment to buy.
How to Evaluate Fund Suggestions Effectively
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To look beyond the marketing appeal of “best buy” lists, you need to take a systematic approach. Start by asking yourself what the list is meant to do and how it was put together. Many lists rely on past performance, which doesn’t guarantee future success.
Look closely at how the selection process works. Research shows that affiliated funds are much more likely to be added to recommendation lists than non-affiliated funds and much less likely to be taken off. As a result, the process results in a long-term percentage of suggested affiliated funds that is 3.8 times greater than that of non-affiliated funds.
Most importantly, check to see if the platform and the funds you want to invest in have agreements to share profits. Research indicates that platforms are more likely to recommend funds that share a larger percentage of their revenues with them.
When looking at recommendations, think about these important things:
- Compare how well you did to the right benchmarks and groups of peers
- Use metrics like the Sharpe ratio to figure out risk-adjusted returns
- Check out the fund manager’s history and how they plan to invest
- Please review the expense ratios of funds that are comparable to yours
- Check the size and liquidity of the fund
In the end, using more than one best-buy list as a guide gives you more protection. Buy lists are still essential for DIY investors, but it’s important to know their limits.
What the Data Shows About How Well Things Went in the Past
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Recent data shows that fund recommendations are not as clear-cut as they seem. A Trustnet review from 2026 found that interactive investor’s list had the most first-quartile funds, with 42%. AJ Bell came in second with 38%, Fidelity with 35%, Barclays with 31%, and Hargreaves Lansdown with 27%. However, research shows that recommended products usually don’t do as well as non-recommended ones. On average, returns are about 1% lower for recommended products than for non-recommended ones.
Research on analyst recommendations shows that they used to be good at predicting market returns, but they aren’t as good at it anymore, especially in developed countries. This drop in predictive power happens at the same time as trading frictions go down and market efficiency goes up.
Research has shown that both ratings levels and changes can help predict returns. Buy and strong buy recommendations generate more profit than hold, sell, and strong sell recommendations. Also, looking at different times shows that investing in a strategy that combines levels and changes would have grown from €0.95 to over €22.90 between 1986 and 2006. In contrast, investing in a single-strategy approach would have only grown to €6.68.
What is the most reliable method to predict an individual’s future performance? Costs. Historical market data shows that fees are the only thing that can consistently predict future mutual fund returns over the long term. Sadly, the common warning that “past performance does not guarantee future results” doesn’t help people make good investment choices very much.
Final Thoughts
After reviewing the evidence regarding “best buy” fund lists, a clear pattern emerges. These well-known suggestions always do worse than the right benchmarks, and only a small number of them beat market indices. Even though they don’t do as well as they should, these lists are still essential. They help about 70% of DIY investors choose what to buy when there are so many options.
Instead of being the only guides, consider these lists to be starting points. While they are convenient, they often suffer from conflicts of interest, with platforms significantly favouring affiliate funds that may share revenue. This bias typically results in suggested funds yielding returns approximately 1% lower than those not recommended.
To be a responsible investor, you need to look past the marketing appeal of “best” labels. You should look closely at the selection method, compare performance to the right benchmarks, look at risk-adjusted returns, and expense ratios. Also, looking at more than one best-buy list protects you more from biases on each platform.
Fees are the best predictor of future success, which is likely the most important thing. When compared to the right benchmarks, past results may look good on their own, but they don’t usually lead to future success. So, instead of going after funds that used to do well, your investment strategy should focus on low-cost options.
“Best buy” lists for funds are useful because they make a complicated market easier to understand. Still, their limits mean that you should be careful. Smart investors know that these lists are just one tool among many. They know that doing their research and being aware of fees will lead to better long-term results. When you hear a “best buy” suggestion, keep these facts in mind: what’s best for the platform might not be what’s best for your portfolio.
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