If you’ve been investing for a while, there’s a good chance that certain funds will have found their way into your portfolio. An S&P 500 and/or Nasdaq ETF are likely inclusions. FTSE 100, 250 and World Index trackers are very good bets, as are a handful of actively managed vehicles.

Take Fundsmith Equity (B41YBW7), for example. When Terry Smith launched the fund in late 2010, many investors were understandably cautious. Smith, the East London born son of a lorry driver, had earned a reputation as a City maverick, so his refusal to advertise Fundsmith, ignoring doubters who said the only way to build a new funds business was a big media campaign, cemented this reputation. 

Even so, it didn’t take long for investors to cotton on that there was something compelling about Fundsmith’s concentrated investment strategy, selecting only the very best global companies with sustainable growth prospects. Smith’s mantra to ‘buy good companies, don’t overpay, then do nothing’, has become an investment axiom.

Today, the fund manages more than £20 billion worth of investor’s money, even if recent performance has lost the fund a tad of its lustre. Household names like Microsoft (MSFT:NASDAQ), Meta Platforms (META:NASDAQ), Philip Morris (PM:NYSE), Visa (V:NYSE) and L’Oreal (OR:EPA) litter the portfolio.

But even concentrated quality global funds own stakes in companies largely unknown to most ordinary investors. To address this information imbalance, Shares has selected five popular funds and investments trusts with a high-quality company tilt.

Having spun through these portfolios, we have picked out a stock from each fund, a company you may know very little about, yet features within the fund’s top 10 largest holdings.

The funds we landed on are Blue Whale Growth (BD6PG78), Fidelity Special Situations (B88V3X4), JPMorgan Global Growth & Income (JGGI), and Finsbury Growth & Income Trust (FGT), plus the previously mentioned Fundsmith Equity.

It is worth noting that while Finsbury Growth & Income Trust and Fidelity Special Situations have a remit that allows them to invest globally, they both prefer to focus mainly on UK companies.

You can see from the table, there are several names with a familiar ring to them that feature in more than one of our selected funds, yet you might think it’s a relatively small number considering the investment style overlap. For example, the Finsbury Growth & Income Trust and Fidelity Special Situations fund, which we have noted, largely concentrate on UK stocks, don’t have a single shared stock pick between them (although there may be commonality below the top 10 stock lists).

Here we present a quick hit guide to what these companies do, what attractions their shares might hold, and what are the risks to be watchful of.

Fundsmith Equity (B41YBW7) 

Stryker (SYK:NYSE) $373.1

Market cap: $142.7 billion

WHAT DOES IT DO?

Medical technology company Stryker has established itself as a dominant player in the orthopaedic robotics space with its Mako SmartRobotics platform.

The technology integrates robotic precision with proprietary implants such as Stryker knees. Patient outcomes are improved through quicker recovery times and less time in hospital, creating recurring demand for Stryker’s joints.

The company also offers products and services in medical surgery and neurotechnology.

WHAT IS THERE TO LIKE ABOUT THE STOCK

The business generates high margins and strong free cash flow, which has grown at an annualised rate of 17% over the last five years.

There is a significant growth opportunity outside the US where the company is underrepresented, contributing just 25% of net sales. Mergers and acquisitions provide enhanced growth opportunities with a focus on innovative medical technologies.

WHAT TO BE CAREFUL OF

Not surprisingly, quality growth companies like Stryker trade on premium valuations. With a 2026 forecast PE (price to earnings) ratio of 25 times, based on consensus forecasts, there is little room for error. [MG]

JPMorgan Global Growth & Income (JGGI)

Southern Company (SO:NYSE) $88.83

Market cap: $97.4 billion

WHAT DOES IT DO?

Southern Company is the second largest utility company in the US, in terms of its 4.68 million retail customers, with a power infrastructure system that draws on multi-energy sources, including natural gas, solar power, wind power, carbon-free nuclear, battery storage, microgrids and other sustainable sources.

WHAT IS THERE TO LIKE ABOUT THE STOCK

As a highly regulated utility, cash flows are predictable and strong which means investors have access to de-risked income years into the future, great for those thinking about switching from a salary-based to portfolio-based earnings steam.

Another thing that stands out to us is its operating margins, which stood at 26.4% last year, from which we infer a streamlined workforce and operating model. Yet, with margins having been as high as 36% in the past, we perceive this to mean that there are still efficiency gains to be drawn out, potentially bolstering dividend growth down the line. Income yield is not the largest, forecast at 3.3% in 2025 (to December) but cover pf 1.45 times looks overly cautious, which adds to the case for faster payout growth in time.

WHAT TO BE CAREFUL OF

Perhaps higher dividend growth will not materialise, which may cause investors to think again about paying 20 times earnings for a 3.3% income yield, is one risk. Beyond that, it’s the same story as with any utility, with regulators forcing the company to pump millions of dollars into an aging infrastructure.  

Blue Whale Growth (BD6PG78) 

Lam Research (LRCX:NASDAQ) $92.2

Market cap: $118 billion

WHAT DOES IT DO?

Lam is a Silicon Valley-based tech firm that designs and makes a range of unique semiconductor manufacturing equipment focused on meeting the industry’s escalating demands and complexity. Lam Research designs specialist equipment that helps semiconductor manufacturers improve yields, lower costs, shrink processing time and reduce defects on microchips.

WHAT IS THERE TO LIKE ABOUT THE STOCK

As the world increasingly embraces a digital-first future, anything that can help the semiconductor industry to drive down costs, boost efficiency and bulk up the power of microchips should have a bright future, and this is exactly where Nasdaq-listed Lam oozes pedigree.

Operating margins have averaged 28.7% over the past five years, while returns on investment and equity has averaged over 36% and nearly 60% since 2019, while impressive free cash flows allow the company to continue to invest in the business to retain its best-in-class position in the rapidly changing semiconductor ecosystem.

WHAT TO BE CAREFUL OF

The big elephant in the room is the soured relationship between Washington and Beijing that has led to tightening restrictions on Chinese companies’ access to US technology. How this will ultimately play out, and the impact on Lam, remains to be seen. However, it has managed the situation impressively to date, with record-breaking quarterly revenues and earnings announced for Q3 fiscal 2025 in April (post an October 2024 10-for-one stock split).

Fidelity Special Situations (B88V3X4) 

Cairn Homes (CRN) 183p

Market cap: £1.14 billion

WHAT DOES IT DO?

Developer Cairn Homes (CRN) is a leading Irish apartment and house builder. In 2024, the firm built just over 2,200 homes, posting a 29% increase in revenue to €860 million and a 36% increase in pre-tax profit to €135 million.

Return on equity rose from 11% to 15%, allowing the company to increase the dividend by 30% and taking total shareholder returns to €115 million including buybacks.

At its AGM trading update in May, the firm reported ‘very positive trading’ in the year so far with ‘continued scaling of our operating platform and increased investment in our growing number of active sites throughout Ireland’.

Chief executive Michael Stanley commented: We’ve experienced sustained, positive momentum since the start of the year, as evidenced by the growth in our order book to over 3,000 new homes.’

WHAT IS THERE TO LIKE ABOUT THE STOCK

Alex Wright, manager of Fidelity Special Situations (B88V3X4), is a staunch supporter of the firm.

‘Today there are only two truly scaled Irish housebuilders compared to more than 10 in the UK. The market is supported by strong population growth, a strengthening mortgage market and favourable government initiatives aimed at boosting housing,’ says Wright.

‘Cairn is well-positioned to benefit from these trends and is attractively valued. Its latest trading update revealed positive momentum in its pipeline and strong profitability.’

WHAT TO BE CAREFUL OF

As a housebuilder, Cairn’s fortunes are likely to be tied to interest rates, which dictate mortgage availability and affordability, and the economic backdrop in Ireland, both of which, in turn, feed into demand for homes. A downturn in the economy could hit sentiment and performance. [IC]

Finsbury Growth & Income Trust (FGT) 

Sage (SGE) £12.58

Market cap: £12.3 billion

WHAT DOES IT DO?

Provides crucial business management software to more than six million largely small and medium-sized businesses. Its roots are in accountancy products, but this has expanded over the decades to include things like payroll, human resources, and business management tools.

WHAT IS THERE TO LIKE ABOUT THE STOCK

Sage is one of those UK companies that seems to have been around forever but seldom gets talked about. This is a built-in-Newcastle tech business that has become a genuine global player. Competition is fierce yet Sage has proven time and again that it can fight its corner and continue to grow with a consistency that will appeal to many buy and hold investors.

Because software development costs are largely upfront, its means revenues from onboarding new customers falls largely through to the bottom line, as evidenced by improving operating margins in recent years (19.4% in fiscal 2024), with a company target pitch at 23% over time.

Sage has also cleverly been deepening its partnership with Microsoft, knitting the US tech giant’s AI Copilot tools into its own Sage Copilot assistant and rolling it out to more customers. And unlike many tech stocks, Sage comes with an income yield, estimated at 1.9% for fiscal 2026 (to end September).

WHAT TO BE CAREFUL OF

Perhaps it is often overlooked because, let’s face it, the accounting software space isn’t very sexy and is savagely competitive. Start-ups such as Freshbooks, New Zealand’s Xero (XRO:ASX) and former AIM-listed FreeAgent (now owned by NatWest) can irritatingly swipe new customers away, but it is giants like Germany’s SAP (SAP:ETR), Quickbooks-owner Intuit (INTU:NASDAQ) and Netsuite which present a far bigger threat.

DISCLAIMER: The author of this article (Steven Frazer) owns a personal interest in Fundsmith Equity and Blue Whale Growth.

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