Interactive Investor

Ian Cowie: winners and losers in my ‘forever fund’ in first quarter of 2022

14th April 2022 08:55

Ian Cowie from interactive investor

Our columnist reports on his personal experience as a DIY investor over the past three months.

Europe’s worst war in more than half a century has destroyed human lives and wealth since Russia invaded Ukraine on 24 February. That caused share prices to plunge during the first quarter of this year and my modest portfolio proved no exception to the downward trend, with only four out of 20 investment trust shares managing to move upwards during the first quarter.

On a brighter note, the leader of the pack surged 31% higher during this dismal period, while the second-placed share in my ‘forever fund’ of investment trusts managed to advance by more than a fifth. Perhaps surprisingly, both focus on frontier or emerging markets.

The biggest fallers

But let’s start with the bad news because I know that some of you enjoy my suffering more than my success. Not for the first time, the worst of a bad bunch was Schroder UK Public Private Trust (LSE:SUPP). It sits in the Association of Investment Companies (AIC) ‘Growth Capital’ sector but scarcely lived up to that title by turning £1,000 into just £728 during the first three months of this year, according to Morningstar.

SUPP is probably best-known for having been set up by the former so-called star fund manager Neil Woodford, when it was known as Woodford Patient Capital Trust or WPCT. Next week it will celebrate - if that is the word - its seventh anniversary since launch in April 2015, with the shares trading at about a quarter of their value back then.

To be candid, the only thing I got right with SUPP was never investing more than 1% of my life savings. It remains a 'forever fund' constituent largely because it serves as a reminder to avoid ‘star fund manager’ hype in future and also because this DIY investor always said I was investing on a 10-year view. At present, it looks like three more years of pain to go.

Next worst was JPMorgan Japan Small Cap Growth & Income (LSE:JSGI), which shrunk £1,000 into £777 during the first three months of 2022. It was followed by former high-flyer, Baillie Gifford Shin Nippon (LSE:BGS), another fund focused on smaller companies in the Land of the Rising Sun, which turned the same sum into £805.

Both suffered from falling confidence that Japan can reverse decades of disappointment when oil prices are rising, given it has little energy of its own. BGS may also have been hit by the fund manager’s distinctive style going out of fashion, because rising inflation and interest rates make ‘jam tomorrow’ stocks that aim for growth but pay low or no dividends look less appealing.

Other investment trusts in my forever fund that fell by more than 10% during the first quarter of 2022 were European Assets (LSE:EAT); India Capital Growth (LSE:IGC); JPMorgan Mid Cap (LSE:JMF); JPMorgan US Smaller Companies (LSE:JUSC); and another former high-flyer, Polar Capital Technology (LSE:PCT). Ouch!

However, Annabel Brodie-Smith, a director of the AIC, helped me keep a sense of perspective: “It’s been a difficult start to the year for markets with the horrific war in Ukraine and inflation rising.

“Consequently, a £1,000 investment in the average investment company at the start of the year would be down 7% to £929 by the end of March.

“But it’s important to remember that investing is for the long term and investment company returns are positive over time. A £1,000 investment in the average investment company invested five years ago would now be worth £1,592 and the same amount invested 10 years ago would be worth £3,126.”

The four trusts that weathered the storm

Even during the last difficult quarter, a diversified global portfolio delivered some winners amid the smoke of war. Step forward ship-leasing specialist, Tufton Oceanic Assets (LSE:SHIP), which managed to remain afloat with a marginally positive return of £1,004 during this storm-lashed quarter. I first invested at $1.21 in August last year and SHIP traded at $1.36 this week, while yielding nearly 6% dividend income.

Next best was Ecofin Global Utilities & Infrastructure (LSE:EGL) where exposure to wind and solar energy helped transform £1,000 into £1,126 by the end of the first quarter. Once again, positive capital returns are enhanced with a healthy dividend yield; currently 3.3%.

Second-best during this quarter, Gulf Investment Fund (LSE:GIF) turned the same starting sum into £1,215. Sanctions on Russia and Iran - the world’s biggest and second-largest sources of liquefied natural gas (LNG) - focused attention on its third largest source; Qatar in the Persian Gulf, which is GIF’s top country allocation. I first invested on 11 February, when I paid $1.86 for shares that cost $2.34 this week.

My top performer during this difficult quarter was BlackRock Latin American (LSE:BRLA), which turned £1,000 into £1,316. Rising demand for commodities - such as the iron ore supplied by BRLA’s top holding, the miner Vale - helped turn this long-term underperformer into the leader of the pack.

Every dog will have its day but whether this one has further to run remains to be seen. In the meantime, BRLA’s dividend yield of 4.7% pays me to be patient.

Holding  Ticker  Sector* or industry  
adidas AG  XETRA:ADS Consumer discretionary  
Apple Inc  NASDAQ:AAPL Technology 
Archer-Daniels Midland Co  NYSE:ADM Agriculture commodities  
Baillie Gifford Shin Nippon Ord  LSE:BGS * AIC Japanese Smaller Companies
BHP Group  LSE:BHP Basic materials
BlackRock Latin American Ord  LSE:BRLA * AIC Latin America 
Canadian General Investments LSE:CGI * AIC North America 
Chapel Down Group CDGP** Beverages 
Deere & Co  NYSE:DE Agricultural equipment
Diageo  LSE:DGE Beverages 
European Assets Ord  LSE:EAT * AIC European Smaller Companies
Ecofin Global Utilities & Infra Ord  LSE:EGL * AIC Infrastructure Securities 
Essilorluxottica  MTA:EL Healthcare 
Exxon Mobil NYSE:XOM Oil and gas 
Fevertree Drinks  LSE:FEVR Beverages 
Fuller Smith & Turner A  LSE:FSTA Food and beverages 
Gore Street Energy LSE: GSF  *AIC Renewable Energy Infrastructure 
Givaudan SA  SIX:GIVN Basic materials
Gulf Investment Fund LSE: GIF  * AIC Global Emerging Markets 
Heineken  EURONEXT:HEIO Beverages 
Helium One Global  LSE:HE1 Basic materials 
India Capital Growth Ord  LSE:IGC * AIC India 
International Biotechnology Ord  LSE:IBT * AIC Biotechnology & Healthcare
ITM Power  LSE:ITM Technology 
JPMorgan Indian Ord  LSE:JII * AIC India 
JPMorgan Japan Small Cap Growth & Income  LSE:JSGI * AIC Japanese Smaller Companies
JPMorgan Mid Cap Ord  LSE:JMF * AIC UK All Companies 
JPMorgan US Smaller Companies Ord  LSE:JUSC * AIC North American Smaller Companies 
McDonald's  NYSE:MCD Restaurant 
Mitchells & Butlers  LSE: MAB Restaurant and pubs
Nestle  SIX:NESN Food and beverages 
Newmont NYSE:NEM Commodities 
Nintendo  NTDOY Interactive home entertainment 
Northern 2 VCT Ord  LSE:NTV * AIC VCT Generalist 
Novo Nordisk  NOVO Pharmaceutical 
Pfizer  NYSE:PFE Pharmaceutical 
Polar Capital Technology Ord  LSE:PCT * AIC Technology & Media
Reckitt Benckiser  LSE:RKT Personal and household goods 
Schroder UK Public Private Trust Ord  LSE:SUPP * AIC Growth Capital 
Smith & Nephew  LSE:SN Healthcare 
Sonova Holding  SIX:SOON Healthcare 
Tufton Oceanic Assets  LSE:SHIP * AIC Leasing 
Unilever  LSE:ULVR Food, personal and household goods 
US Solar Fund Ord  LSE:USF * AIC Renewable Energy Infrastructure 
Vietnam Enterprise Investments Limited  LSE:VEIL * AIC Country Specialist 
Versarien  LSE:VRS Basic materials 
Worldwide Healthcare Ord  LSE:WWH * AIC Biotechnology & Healthcare

* AIC stands for Association of Investment Companies.  
**available to trade on the ii platform under the ticker CDGP.
This is a complete list of Ian Cowie’s stock market investments as of 14 April 2022. It is not financial advice nor is any recommendation implied. Share prices can fall without warning and you might get back less than you invest.

Ian Cowie is a freelance contributor and not a direct employee of interactive investor.

Ian Cowie owns shares in Baillie Gifford Shin Nippon (BGS); BlackRock Latin American (BRLA); Ecofin Global Utilities & Infrastructure (EGL); European Assets Trust (EAT); Gulf Investment Fund (GIF) India Capital Growth (IGC); JPMorgan Japan Small Cap Growth & Income (JSGI); JPMorgan Mid Cap (JMF); JPMorgan US Smaller Companies (JUSC); Polar Capital Trust (PCT); Schroder UK Public Private (SUPP) and Tufton Oceanic Assets (SHIP) as part of a globally diversified portfolio of investment trusts and other shares.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. 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.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.