This article is part of the special series, Investing with ISAs.
Better Sooner than Later
If you are scrambling round to use up your ISA entitlement for the current financial year, learn a valuable lesson: buy earlier for 2013-2014. Better to buy at leisure than repent in haste.
I would not discourage any investor from mopping up any remaining tax-free entitlement; if you hold shares for the long term you will eventually gain more than by leaving cash in a bank account, even if you buy toward the top of a bull run.
However, there is a serious danger of making a poor choice if you rush your decisions. The nearer we get to the ISA deadline on April 5th, the more likely you are to rush and get it wrong and the greater the merit of letting your entitlement pass unused.
I warned when the FTSE 100 index moved above 6,400 points that the index was likely to be driven higher by investors rushing to invest before the financial year end and it now looks as if that is the case. There is a real danger that shares will be pushed unreasonably high in the scramble and that there will be a sharp correction later in April.
It is now more than a decade since I made the mistake of scrambling to invest in an ISA in the first few days of April and it took years for that investment to pay off. Never again.
I now invest my ISA allowance as early in the financial year as is prudent. I do not invest for the sake of it and I do not rush to use all the entitlement up at once. This time next month I shall be looking for bargains. The more time you have to play with, the greater the opportunities.
Reversal of Fortune
Three years after his disastrous and expensive attempt to buy the Asian assets of AIG, 
Prudential (PRU) chief executive Tidjane Thiam is sitting pretty. Prudential has flourished on its own since then, mainly thanks to its Asian assets. This success has proved that Prudential did not need AIA in the first place but let us not detract from Thiam’s success in learning from his mistake and making the most of what he already had. One wonders if he would have done so well had he not been spurred to make amends.
Prudential shares have doubled in a little over a year. That rise includes more than £1 this week since terrific full-year profits produced a sharp rise in the dividend. This year is likely to be tougher so if you are looking to buy in you should let the shares settle back a bit. If they don’t, walk away and put it down to experience. But if you already own Pru shares, well done. Consider staying invested and enjoy the fun – you deserve it.
Fat of the Land
I am personally not keen on commercial property shares. With so many question marks hanging over the economy I feel that it is risky to commit oneself to the sector that depends most heavily on everyone else pulling their weight.
It’s also a cumbersome sector in the sense that timing is very difficult. It takes so long from putting the first pencil line on the architect’s sheet of paper to seeing the last tenants move in that it is virtually impossible to guarantee that the building hits the top of the market. Chances are that the dream comes to reality just as a glut in property hits the market. The difficulties of filling the Shard, London’s newest landmark building, do not inspire confidence.
Nor do I like the wheeler-dealer attitude one sometimes sees as property owners reshuffle their portfolios for no obvious reason. Why would one company expect to succeed with a building that another company wants to ditch? One hopes that those doing the deals know what they are doing, but it is too much of an act of faith for me to invest. I can’t help feeling that one side of the bargain has got it wrong.
British Land (BLND) has splashed out £213 million in the past few months and sold City skyscraper Ropemaker Place for £472 million. Despite the fact that balancing out these two deals produced a sizeable surplus, British Land has placed 90 million new shares, about 10% of the enlarged company, to raise roughly £500 million.
I don’t like such large placings, as they are unfair to existing shareholders. They are admittedly much cheaper than a rights issue but they mean that outsiders get new shares at below market price, in this case for 550p compared with the prevailing market price of 580.5p. British Land shares promptly dropped 25.5p to 555p.
That does not tempt me personally but it is worth noting that anyone considering buying British Land shares suddenly had an opportunity to get in at a lower price. The shares stayed below 560p for a few days so this was an opportunity that stayed around long enough for you to do your research.
At least British Land demonstrated that openings can occur even as time runs out on the financial year.
Rodney Hobson is a long-term investor commenting on his own portfolio; his comments are for informational purposes only and should not be construed as investment advice.
Market Performance: March 11 - 15
FTSE 100 Index: +0.04%
FTSE 250 Index: +0.62%
FTSE All Share: +0.14%
FTSE Small Cap: +0.68%
FTSE AIM 100: -0.74%
FTSE Fledgling: -0.06%
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