In the current environment it is increasingly difficult to get both income and growth from any one asset. As a result, private investor Aidan Clubley has tried to build up a diverse portfolio; including property, car parking spaces, direct shareholdings as well as more conventional managed funds.
“It’s trying to get the balance right between income and growth. I want my investments to provide some yield, but also want to ensure that my capital grows over the longer term,” he explained. “Access to my money is also a factor. While I am prepared to tie up some of my savings for longer periods – I don’t want all of my money to be locked away. I want to be able to access some of my capital, should I need it.”
Clubley says this approach also means he has a very mixed risk profile: “Some of my investments are far riskier than others. But where I have higher risk holdings I try to balance with investments that deliver steadier returns.”
Investments to Supplement Wage Income
Clubley, who lives in Buckinghamshire, began his career by working in banking but retired from this at the age of 50. He then went on to own a number of restaurants and wine bars, as well as his own credit management and consultancy business.
Although his business still provides an income, he is increasing looking to his investments to supplement this. In recent years property has been a mainstay of his portfolio. As well as owning his business premises he also owns a couple of local buy-to-let properties. More recently he has invested in Property Partner, a crowdfunding platform that allows investors to club together to buy UK residential property.
He says: “This enabled me to get a foothold in the London property market. It would be too expensive to buy a property there outright. I’ve invested in a couple of new-build flats in areas which are to be connected by cross-rail so hopefully they will appreciate in value.”
Investors split rental income and the properties are typically sold after six years. However, Clubley says he likes the fact that there is second-hand market for investors to trade the stakes they own in these properties.
While he says he gets a reasonable yield from these properties, his best income asset at present is an airport parking space in Glasgow. “Here your money is locked away for five years, but I get an 8% income for the first two years, 10% income for the next two, then 12% for the final year.”
Typically, investors need to deposit a large lump sum to invest in such schemes. Investors should think very carefully before opting for these alternative investments as they are unregulated and should only ever make up a small part of a large diversified portfolio.
Funds for Equity Exposure
When it comes to equity investments, Clubley says he has made decent returns on a couple of Henderson funds. He invests in Henderson European Selected Opportunities, and Henderson Global Growth.
As well as offering exposure to different geographical areas, Clubley feels the two funds complement each other in terms of risk profile. The European fund, is invested in larger blue chip companies, while the global fund is considered more high risk as its invested in slightly smaller companies, often at an early stage in their development.
The European Selected Opportunities fund has a four-star performance rating from Morningstar, reflecting its strong returns in recent years. The manager John Bennett is described as an “experienced and talented fund manager” by Morningstar analysts, who have awarded him a coveted Silver Rating.
Morningstar analysts say: “One of Bennett’s strengths is his continual assessment of the [investment] process and there have been enhancements over time. He pays close attention to macroeconomic trends, as he believes an understanding of global market and industry dynamics gives him a valuable insight into the behaviours of European stocks.”
Global Growth has a five-star performance rating from Morningstar – showing it has outperformed the majority of peers in recent years. This global fund invests in a “concentrated” portfolio of innovation-focused stocks. In the last five years it has produced at least 10% a year – the only exception being 2015, where it chalked up a 9.1% return. In four out of these five years its benchmark has produced returns of less than 1%.
Speculative Stock Picking
Aside from these funds he also has a number of direct shareholdings. But Clubley says: “These are far more speculative. Hopefully I will make a good return on some of them, but I am not relying on these returns to fund day to day living costs. It’s a bit more of a gamble, and more of a hobby really.”
He says he invests in some smaller company shares – such as Fevertree Drinks (FEVR), as well as larger FTSE 100 companies like Experian (EXPN).
Fevertree is a supplier of ‘premium’ carbonated drinks and mixers, and in the past year has seen its share price rise by a staggering 122% according to Morningstar data. It mainly sells its drinks to hotels, restaurants, bars and off-licences.
Experian’s core business is as a credit rating agency, and it is a major player in both the US and UK markets. It has a two-star rating from Morningstar, meaning its current share price is greater than Morningstar analysts’ fair value estimate for the firm. Morningstar says this company has a “wide economic moat” reflecting the fact it is hard for other competitors to move into the markets it dominates.
Morningstar says: “[Experian] has not been content to simply operate its existing businesses, instead expanding through acquisitions into new businesses and new countries. The company now generates about one fourth of its revenue outside North America and the U.K., which we think positions it well to increase revenue and shareholder value.” For example, it is a leading player in the Brazilian market.
