What investments are good for the next 40 years?

by Faith Glasgow from Money Observer |

Four decades after our magazine launched, some investment trends and opportunities will persist, writes Faith Glasgow.

How times change. It's hard to believe that 40 years ago, when Money Observer was first published, Margaret Thatcher had come to power months previously, Franco's era in Spain had ended only four years earlier and the UK had just three television channels. On average, men at state pension age lived for just five years (now it's more than 14) the average price of a home was just under £14,000 and a pint of milk cost 15p.

The Money Observer, as it was faithfully entitled, started life in October 1979 as a quarterly supplement published by The Observer. It sounds surprising these days, but the cover story for the inaugural edition was a round-up of building society interest rates; however, at that time the average savings account paid a meaty 17% interest, boosted by Thatcher's strategy of raising rates to combat 13% inflation.

Moving with the times

Four decades and three editors down the line, the magazine's focus has moved with the times to focus increasingly on unit and investment trusts, as these have gained traction and significance for a wider cross-section of investors over the years – but also on pension-related stories, as investors have been pushed steadily towards taking personal responsibility for their retirement income.

We could easily devote this 40th anniversary issue entirely to the investment trends and developments of the past 40 years. Indeed, we do take a stroll down memory lane with former editor Andrew Pitts' fascinating foray into the opportunities investors have had to make easy money over the period. But we focus mainly on practical matters: helping today's readers become more successful investors. Some of our 40 ways to become a better investor will be familiar to longstanding readers; others, we hope, will give even the longest-standing subscribers food for thought.

By coincidence, we have a triple celebration this month. We mark the 10th birthday of our Share Sleuth portfolio of outstanding companies at cheap prices – and there is good cause to break open the champagne on that front, as we celebrate a gain of 314% over the decade.

Even better, as we go to press, deputy editor Kyle Caldwell has just been chosen as the Association of Investment Companies' Consumer Journalist of the Year. The winner is chosen by investment trust industry experts, so we are delighted with the recognition for Kyle's work.

On another tack: what investments are good for the next 40 years? Anyone following today's political events will be all too well aware that it's rash to make predictions for the next few days, let alone coming decades. However, I think some investment trends and opportunities will persist, so I have selected four Money Observer Rated Funds to buy and hold long-term. Of course, they are vulnerable to inevitable changes such as manager moves and market events, but they offer high-quality routes into macro trends.

Sustainability is one. Fund managers are realising that businesses that embrace good environmental, social and governance (ESG) principles tend to be more robust than less ESG-focused peers. Royal London has a long record in the sustainability field and Mike Fox's Sustainable World Trust, a global multi-asset fund that holds 85% in shares, seems a sound core choice.

Small companies tend to outperform over the long term, and I am opting for Edinburgh Worldwide Investment Trust (LSE:EWI) as a globally focused option, not least because management group Baillie Gifford's whole philosophy is about the long view. This trust also ticks my technology requirement box, as it has a strong bias to biotechnology and software firms.

Climate change is not going away, and Pictet Water plays on that theme. It invests in a mix of traditional utility companies but also those looking to solve water-based problems globally. Finally, it's sensible to have an emerging market play; I like JPMorgan Emerging Markets Investment Trust (LSE:JMG) for its focus on growing domestic consumption in these markets. We hope you enjoy this special issue.

The author has holdings in Edinburgh Worldwide and Pictet Water.

This article was originally published in our sister magazine Money Observer. Click here to subscribe.

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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