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Byline: John Newlands

Only a few years ago the world of unit and investment trusts was confined to a few worthy generalists, smaller companies funds and maybe, for the adventurous, something focussed on Japan.

It's certainly a different matter now. The investment companies' universe runs to more than 800 different funds giving exposure to anything from carbon credits to Vietnamese property to Uranium mines.

Risks and volatility - not necessarily the same thing - vary enormously too.

So do the likely timescales before the targeted returns come through.

Investment trusts, as investment companies still tend to be called for historical reasons, can invest in illiquid situations like property or North Sea oilfields and wait for the profits to flow.

It is harder for open-ended funds, like unit trusts, to do this.

This is for liquidity reasons - if investors want out then the fund manager has to sell portfolio holdings to pay them back.

The fund size is expanding and shrinking all the time depending whether there are more buyers or sellers. Portfolio liquidity is therefore a must.

Getting back to time horizons, younger investors can afford to wait for any long-term outperformance to materialise.

Short-term volatility should not worry them unduly as long as the fund gets there in the end. It surprises me therefore when I sometimes read that large generalist funds are the only sensible route for those starting out their working life.

By all means build up a core portfolio that way and ideally throw in a spread of monthly investment plans too. Trusts like the Alliance of Dundee tend to run their own monthly schemes at modest cost.

Having done that, what is the best way to take advantage of a long-term horizon to get access to some higher potential returns? The answer is to take up some minority holdings at the more volatile end of the spectrum.

Let's start with how not to go about it. Single country funds are only for the brave. Make that the foolhardy. Think of it as betting on a single number at roulette ... often in a currency of unknown value in a few years' time.

An emerging market fund, on the other hand, like Advance Developing Markets or Baring Emerging Europe could be an option worth considering.

First port of call in my book, however, would be to hold a couple of top-class private equity investment trusts. Even though it is wildly out of style to say it, these funds, carefully chosen, offer by far the best way to have a chance to benefit from the Microsofts, Googles and JD Wetherspoons of the future The key point is that if you are in for the long-term, let time be your ally and get at least some exposure to investment frontiers.

But do it the right way, via the best diversified managed funds that your investment manager can identify.

The value of the investments mentioned in this article, and any income from them can fall and you may get back less than you invested. This article is not intended as investment advice.

No investment is suitable in all cases, and if you have any doubts you should contact your financial adviser. Past performance is not a guide to future performance.

We or a connected person may have positions in or options on the securities mentioned herein or may buy, sell or offer to make a purchase or sale of such securities from time to time.

In addition we reserve the right to act as a principal or as agent with regard to the sale or purchase of any security mentioned in this document. For further information, please refer to our conflicts policy which is available on request or can be accessed via our website at www.brewin.co.uk

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EXPERT ADVICE John Newlands. MONEY MATTERS Brewin Dolphin's offices at Time Central, Newcastle. The company has a proud history of financial services.