Are mutual funds the best thing in the world? They can be.

Here are five that I think anyone starting a stocks and shares ISA in 2025 should consider. I’ve already bought two of these myself.

Highlights for me? An investment fund can provide diversification with just one purchase. We have a wide range of investment strategies to choose from.

The five largest trusts

I would challenge anyone to choose five stocks for a novel ISA that can match this number in terms of diversification – both across industries and global spread.

The first thing I notice is the Premium/Discount column. A negative number means that the stock is selling at a price lower than the net asset value (NAV) of the asset in which it is invested.

They look affordable in that respect. However, the discount also reflects the risk that the market sees in the mutual fund.

Cheap vs. risky

Look at the Scottish Mortgage Investment Fund. The risk results from the shares in which it invests its shareholders’ money. We are talking about high values Nasdaq here are the shares – the so-called the great seven of artificial intelligence (AI) and the rest.

Scottish mortgage holds Amazon, Nvidia, Tesla…and several analysts are now calling it an AI bubble.

After hitting an all-time high in September, the Nasdaq even lost some value. However, I believe it is much too early to give up on shares of the world’s leading technology companies, at least given my investment horizon of at least five years.

With this in mind, I believe that the 12% discount must make Scottish Mortgage a valuable option for those who want a more diversified technology development investment.

Better to haggle

Bankers Investment Trust has similar discounts by investing in some of the same Nasdaq stocks. But it also stores stocks like Visa AND Chevron. I think he’s less exposed to the risks of tech stocks. And I wonder if this could be an anomaly in the form of a low price. I need to dig deeper.

I’m also surprised by the difference in discounts between City of London and Murray Income Trust. They are very similar in terms of strategy, dividends and holdings. Both include Unilever, AstraZenecaAND RELAX in their top ten, as well as other top ones FTSE100 shares.

I wonder if the fact that Murray Income is managed by abrdn could it have something to do with it? This company is not appreciated by investors, and its value has decreased by 20% over the last 12 months. Again, further research is needed.

Good mix

All the mutual funds I have looked at have been increasing their annual dividends for many years. If any of these weaken over the course of the year, there will be share price risk (in addition to strategy specific risk).

But looking at the current discounts, there’s a very good chance I’ll add another one of these five to my 2025 ISA.