Which Isa is the lockdown winner: mine or my son’s?
Money Observer’s Prudent Parent compares the performance of his own stocks and shares Isa with his f…
12th June 2020 09:14
by Kyle Caldwell from interactive investor
Money Observer’s Prudent Parent compares the performance of his own stocks and shares Isa with his firstborn’s Junior Isa.
The coronavirus market sell-off has been painful for investors, but when comparing the performance of my stocks and shares Isa with my son’s Junior Isa, there’s been one clear winner – me.
Does that make me a bad father? Well, I suppose that’s for my son to judge in 16 years’ time, when the key is effectively cut and handed over to him to do what he pleases with the money. By then, though, I hope the investment trust I selected for his Junior Isa will have outshone the small number of funds and investment trusts I hold in my Isa.
Just over two years on from opening the Junior Isa, my son’s sole holding, Aberdeen Standard Asia Focus investment trust, shows a loss of 22%. While far from ideal, this is not a complete disaster; other Asia and emerging market-focused funds have fared worse, and given that the trust invests in small businesses, I knew it was not going to be a smooth ride.
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The premise behind purchasing the investment trust has not changed: over a long period (which has now fallen from 18 to 16 years), I believe Asian economies will continue to outpace those in the West, due to their younger populations and growing middle class. In an attempt to access the fastest-growing areas, Asia smaller companies seem a good fit.
One key reason I invested in the Aberdeen trust is because it’s managed by Hugh Young, a star fund manager who has a large amount of his own money invested in the trust. This struck a chord with me .
In terms of my own stocks and shares Isa, given that I have greater levels of diversification than my son, as I hold two investment trusts and two funds, my ‘outperformance’ (it has still fallen) from January to the end of April does not come as a surprise. Ultimately, I have my top Isa holding, Scottish Mortgage, to thank for counterbalancing the losses I suffered elsewhere.
A Junior Isa investment is for the very long term, and until I set pen to paper for this month’s column, I spent more time tracking down the password to sign into his account than I did worrying about how performance had been faring of late.
This article was originally published in our sister magazine Money Observer, which ceased publication in August 2020.
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