Like many people, Dan Emberson’s thoughts first turned to investing when he was trying to get on the property ladder.
He says: “My wife and I decided to take out an ISA when we were saving for the deposit for our first home.” After seeing the poor returns paid on cash ISAs Emberson and his wife Charlotte decided they should start an investment plan to make the most of their savings.
He says: “We don’t have a lot of money to invest each month so we want to make sure our money is working for us.”
Emberson, 32, works in marketing and in recent years has worked for a financial services company. “Through my job I have become more aware of the benefits of investment and the different products and funds out there. I decided it was probably time to practice what I preach.”
Emberson said he initially had a small lump sum to invest in an ISA will drip feed monthly contributions on top of this. He decided to split his money across a number of investment funds, in order to diversify his holdings.
He says: “I wanted to hold a range of funds and was happy to take on a bit more risk. There was certainly a lot of noise and publicity around a couple of fund managers, so I looked at them first to see whether they would suitable for me.”
After this initial research Emberson decided to split his money between four funds: Woodford Equity Income, Old Mutual UK Alpha, Axa Framlington Biotech and Architas Multi-Asset Blended Progressive.
Choosing Dependable Fund Managers
According to Morningstar analysts Neil Woodford’s eponymous fund offers “exactly what investors would expect from one of the UK’s most experienced equity-income managers.”
This fund was launched in June 2014 after Woodford left Invesco Perpetual to set up his own fund management company. Although the fund has only a one-year track record, Woodford has a 30-year plus track record and has run equity income funds since 1988. He has a bronze-medal rating from Morningstar reflecting their confidence in him to continue to outperform peers. The fund was the top performer in its sector in the first 12 months since launch.
It is a similar picture with Old Mutual UK Alpha, which is also run by another industry stalwart Richard Buxton. Morningstar analysts award Buxton a Silver-medal rating, and the fund has a two-star rating reflecting both its strong performance in recent years and their continuing confidence in his ability to deliver value for investors.
Buxton has been running this fund since December 2009, and has 30 years’ experience as a fund manager. However, Morningstar analysts say they have ‘some reservations’ about his recent appointment as CEO of Old Mutual Global Investors in August this year.
The Axa Framlington fund is a more specialist offering - investing solely in then biotechnology sector. Since 2012 the fund has produced strong gains, returning 45.3% in 2014 alone. However during 2015 returns have been more volatile, which is common with single sector funds.
Multi-Asset Investing to Steady Returns
The Artchitas fund was not on Emberson’s original ‘hit-list’ of targets. He says: “I initially had my money in JP Morgan Global Property.” He says he thought this was give him some exposure to rising house prices - while also offering diversification away from a purely equity based portfolio.
However, he has since transferred this holding into the Architas fund which he believes will offer more effective diversification with its multi-asset approach.
The couple’s circumstances have also changed. Although they were initially saving for a deposit a small inheritance enabled them to get the mortgage they needed to buy their first home. Emberson said he thought it was less important to hold a property fund as a result.
He says: “I have decided to keep investing though. It’s a useful habit to get into. We are obviously thinking about starting a family in future - so perhaps it’s best to save while we can!”
Learning to Stomach Market Volatility
Aside from this ISA holding he also invests into a workplace pension. But he says that while there is a range of funds to choose from he has simply taken the default option.
He says: “I’ve been investing for just over a year - and the market has certainly been challenging over this time. I put in a lump sum at the start, and that possibly wasn’t perfect market timing. But you have to learn not to keep checking values on a daily basis.
“I know volatility is part and parcel of investing. I am putting money in on a monthly basis; hopefully this will make the most of any downturns, so our savings can continue to grow for the future.”
