There’s no magic formula when it comes to investment. You can’t time the market, or predict with any certainty which events will impact asset prices. The best way to invest is to look at the fundamentals of a company or a particular market and make a decision based on its long-term prospects, but even this can be educated guesswork. You would think that people whose job it is to write about investment would have a better insight than the average Joe, but I know a few (myself included) who have been burned by bad decisions in the past (I’m looking at you, gold and natural resources funds). So I thought it would be interesting to ask some of my fellow financial journalists what’s in their portfolios. Please note, none of this should be taken as an endorsement of any particular fund, it is simply an excuse to be nosy. So here are a selection of ISA investments, given on condition of anonymity, from financial hacks:
1 & 2 These two journalists are 100% in cash as they are only saving into Cash ISAs. The deposit rate on cash is very poor at the moment because, for now at least, UK interest rates are still at a record low. But equity markets are at record highs and some analysts have warned a correction is on the horizon. Maybe at this point, these two will be looking to put their cash to work in the equity markets.
3 This journo has a long time horizon for his investments and a high tolerance for risk, so he’s split his portfolio between emerging markets and special situations (these are companies undergoing some sort of restructuring or change which means their shares look undervalued compared to their future potential). He’s got two-thirds of his ISA in First State Asia Pacific Leaders, and Aberdeen Asian Smaller Companies, which is an investment trust.
4 This hack doesn’t cover investments as closely as some of the others, so she opted for an off the peg, ready made ISA (more on these here) from a well respected provider. She chose the Adventurous portfolio in the range, so her fund selection will have a higher risk/reward profile which is well suited to her age and ability to invest for the very long term.
5 This journalist wanted exposure to the major developed equity markets, so she went with just a couple of conviction bets, splitting her portfolio 50/50 between two funds – Schroder UK Growth and Fidelity American.
6 The biggest equity markets tend to be well covered by analysts which means it can be harder for active fund managers to ‘add alpha’ by finding mispriced investment ideas no-one else has. So index trackers can sometimes be a better, cheaper way to get exposure to these markets without trying to beat the index return. This journalist chose L&G’s UK 100 index tracker, and BlackRock’s Emerging Markets Equity tracker. She also has AXA Framlington Biotech to add a bit of spice to her portfolio, and she has property exposure through a buy to let flat she owns, which gives her a return of around 15% a year.
7 This journo is a big fan of investment trusts and also has a keen eye for a bargain. She snapped up shares in the Edinburgh investment trust after they slid on to a big discount when star manager Neil Woodford stepped down, handing the trust to Invesco Perpetual’s Mark Barnett. She also has the TR European Growth investment trust, run by Henderson, as well as the Somerset Emerging Market Dividend Growth fund, which is more than £1bn in size and is currently trying to stem inflows.
8 Small- and micro-cap stocks are going to be the big winners over the very long term, according to this journalist, although she is prepared for a volatile ride in the meantime. She has exposure to Marlborough UK Micro Cap, the soft-closed Marlborough Nano-Cap Growth, and Aberdeen Emerging Markets Smaller Companies to play this theme. Her core funds are Richard Buxton’s Old Mutual UK Alpha and Crux European Special Situations, run by former Henderson manager Richard Pease.
She also likes sector-focused funds for diversification, and has AXA Framlington Health and Henderson Global Technology in her ISA.
Expecting wealth managers to outperform in the coming years, she also has small direct holdings in Hargreaves Lansdown and Brewin Dolphin shares.
So, I hope you found this little peek into other people’s portfolios interesting and enlightening. What’s in yours….?