Where should you invest £200,000?

You've got £200,000, you're ready to invest and you don't mind a little adventure - but where should you put that cash? In reply to a letter requesting help, one of the investment experts at our sister website Money Observer offers some ideas.

Q. I read with interest Holly Mackay's article about preferred fund lists in the November 2015 issue. I have about £200,000 to invest and have been investing in these "preferred" funds, which attract investors like moths to a flame. Woodford Equity Income is one of my holdings. I'd appreciate some more ideas, or at least being pointed in the right direction. I am 72, but I own a company and can afford some adventure.

Ken Hitchen, by email.

Holly Mackay replies: Having found out a little more about your circumstances, it's evident that you understand the volatility and risks of the stockmarket but feel pretty confident you can ride out any downturns.

You don't really need to invest for income. You're looking for growth, and are prepared to look at some spicier funds and investments. You already hold the Woodford Equity Income fund, which has done well in its first year and returned around 15%. Woodford holds nearly 100 stocks, including some mainstream large-cap UK stocks, in this fund.

You could look to invest in smaller-cap funds for differentiated exposure to UK firms. One fund regularly tipped by fund selectors is Marlborough UK Micro Cap Growth. As a small business owner, you'll enjoy reading about this fund and where the fund manager invests.

We all tend to suffer from a home bias and invest disproportionately heavily in the UK. You could spread your bets by also looking overseas. I hold the Stewart Investors Asia Pacific fund (formerly First State Asia Pacific), which remains well regarded in the industry despite recent manager shifts. As you would imagine with a fund investing in this region, it's a volatile play, but it's a strong performer.

I also invest in the Lindsell Train Global Equity fund, which has been one of the better-performing funds for me. These guys don't have lots of stocks - typically, fewer than 30 - but they seem to be good at picking them. They offer good, simple, old-fashioned stock selection.

Finally, Ken, you say you want some adventure. I have a small holding in the BlackRock Frontiers Investment Trust. Investment trusts can be more risky than funds, as they are allowed to "gear", or borrow, which can compound losses or gains.

The frontier markets in which this trust invests include those in Nigeria, Kuwait and Kazakhstan. So in terms of investment classification, this is a "puts hairs on your chest" option. However, its long-term potential makes it interesting.

Although you might want some adventure, you need to make sure, with such investments, that you don't panic-sell if developed markets fall by 20% and the spicier options fall by even more. These funds and trusts are for long-term investors only.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.