Interactive Investor

Jeff Prestridge: my new year pension surprise and how it happened

16th January 2023 13:29

by Jeff Prestridge from interactive investor

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Our columnist reveals the secrets of his successful investing technique, the investments he owns and why he bought them, and the one he'll own forever. 

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I had a quick gander at my self-invested personal pension (SIPP) the other day. New year, new focus on my stretched personal finances - battered by tax and sky-high energy bills.

I was pleasantly surprised for once.

Expecting my portfolio of investment funds and stock market-listed investment trusts to have been walloped by last year’s stiff market corrections (not particularly in the UK, but certainly in the land of the free), nothing could have been further from the truth.

My pension may not be flying (or as large as that of my esteemed colleague Ian Cowie), but it’s holding up quite nicely, thank you very much.

I took in the news with a beam stretching from ear to ear and celebrated by making myself a hearty (and thrilling) Negroni, thanks to a dear friend who had bought me all the necessary ingredients for Christmas. Being on a diet, I am now drinking Negroni (or a cheeky Passiontini) instead of real ale. Just one (or two) a week.

I have no Midas touch when it comes to investing (few of us do), but I have embraced many of the investment virtues I write about for the august DMGT, my employer.

These investment rules don’t necessarily protect me when markets cut up rough, but they do provide me with the long-term growth I seek from my personal pension. Gently does it, rather than testosterone-fuelled growth, but I’d always back an investment snail over a hare any day (just see me run, dear readers, I’m a snail).

Diversification is key. Not only in terms of the number of investments I hold (12), the investment houses that run them (all different), but their geographic reach and objectives. And of course, I prefer to hold collective investments over individual shares (stock market-listed investment trusts being the notable exception) any day.

Diversify and diversify again. Although my portfolio is equity focused, I do have a smattering of exposure to income-producing bonds and gold (albeit, primarily gold companies rather than gold bullion).

Maybe I’m a lazy investor, but my portfolio is dominated by global funds. I like these on two levels.

First, some of the country’s finest investment managers run global portfolios - I include Fundsmith Equity’s Terry Smith in this camp, although of course he now spends his days and nights living in Mauritius as opposed to rainy Blighty. Yes, I know, Fundsmith Equity had a dodgy 2022 (recording losses of 13.8%), but Smith is too proud an individual to allow the fund’s performance to linger in the doldrums for too long. He’ll come back with a vengeance. As sure as barmy nights in Mauritius follow beautiful days. His long-term track record – average annual returns of 15.5% since setting up the fund in November 2010 – is quite remarkable.

Second, I rather like fund managers who spread their assets globally rather than focus them on one theme or geographic area. Invariably, the funds they run are rather conservative (Smith’s Fundsmith Equity being an exception), but I don’t have an issue with investment conservatism.

It means my portfolio comprises investment trusts that seek to preserve capital. For example, the likes of Personal Assets (LSE:PNL), run by the very impressive Sebastian Lyon at Troy Asset  Management, and Capital Gearing (LSE:CGT) - managed by veteran Peter Spiller.

It also includes steady capital and income builders such as F&C (LSE:FCIT). This stalwart investment trust has been around longer than me (it was formed in 1868) and it chugs along like a shiny steam roller, puffing out a mix of income growth (51 years of annual dividend increases) and long-term capital growth.

F&C is built to survive all weathers. Hardly proverbial sex on investment legs, but it does an effective job. Brilliant at getting you as an investor from point ‘a’ (when you are accumulating wealth)  to point ‘b’ (when you are in a position to de-cumulate and make withdrawals from your pension). I believe I will be investing in F&C until the Grim Reaper calls.

Other global funds that I like include JO Hambro Capital Management’s Global Select. This £1.5 billion fund is  run (part run, he’s a joint manager) by Christopher Lees who is one of the most impressive fund managers I’ve ever spoken to. I’d trust him with my long-term investment life (I already do, to an extent).

I also hold TB Evenlode Global Income with the income bent of my pension emphasised by holdings in the likes of BNY Mellon Asian Income and Invesco Monthly Inc Plus UK.

Look, I don’t have all the investment answers – far from it. I’m no Warren Buffett and for that matter I’m no Ian Cowie. But by diversifying, my SIPP is moving forward rather nicely. Impending divorce means I won’t benefit from all the fruit it has delivered, but that’s fine – as well as another story for another day.

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.

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