As a new father, Solomon Nevins is rethinking his investment strategy. “Being a parent is great, but you do realise how expensive it is,” he admits. As well as the day to day costs of raising a child, Nevins is considering the more significant bills to come; moving to a larger home, and school or university fees on the not too distant horizon.
Higher education may seem a long way off when you are holding a small baby, but Nevins says it has made him reassess his investment horizons: “We may need to liquidate some investments within the next 10 to 15 years.”
Balancing these short and long term investment goals, he has chosen to invest some of his money in cash ISAs so it is accessible, for a future house move. He has also invested in a some funds he considers to be low risk.
Most recently he invested in L&G UK Property fund. He says: “I invested after the Brexit vote, when a number of property funds suspended trading.” This L&G fund did not suspend trading but imposed a 15% discount on the underlying assets.
Nevins explained: “This was obviously to deter people selling, but also to encourage new investors. This looked like a good opportunity to buy a good defensive assets which would fit well into my portfolio.”
According to Morningstar figures this fund has outperformed the category average in recent years and pays a 2.93% yield.
Although many commercial property funds put restrictions on those selling assets after the EU Referendum vote, these have largely been removed.
Defensive Fund for Capital Preservation
Nevins also invests in the CF Odey Opus fund through his ISA, a Bronze rated fund. He says this funds “runs a very defensive portfolio”.
The fund, which is managed by Crispin Odey, seek to achieve long term capital growth primarily through investment in global equities and fixed interest stocks. The fund also uses shorts – bets on the market – to enhance returns.
However, this more defensive approach can act as a brake on performance during periods of strong stock market growth. Morningstar awards the fund one star for its accumulation shares and two stars for its income-based shares - reflecting the fact that it has lagged behind peers in recent years.
Nevins says: “I see this fund as a hedge myself against more aggressive positions I’ve taken elsewhere.”
Growth Funds for Long Term Goals
Although Nevins says he is rebalancing his portfolio to prioritise capital preservation and stead growth, he has kept some higher-risk investments.
“I consider these more long-term investments. At 30 I’m still relatively young so can afford to take a bit of risk – particularly when it comes to longer-term ISA holdings and retirement savings,” he said.
To this end, he has a kept his investment in Aberdeen Latin America. This Bronze rated fund has a four star rating from Morningstar: reflecting its strong performance in recent years, and the analysts belief that it will continue to outperform peers.
Lena Tsymbaluk, an analyst at Morningstar says: “The fund remains a compelling choice within its sector, managed by a team we regard highly. One of this fund’s strengths lies in the team approach and the depth of the analytical resource of Aberdeen’s 18-strong global emerging-markets team, which is headed by seasoned investor Devan Kaloo.”
The team, she says, aims to invest in quality companies that have the potential for growth, adding: “They look at companies that have sustainable, competitive business models; strong balance sheets; high returns on assets and capital; and good corporate governance. This quality focus is paired with a valuation discipline which ensures that they do not overpay for growth.”
Elsewhere he says he also has a holding in Carmignac Portfolio Commodities. This fund has a four star rating from Morningstar, reflecting its relatively strong performance against peers in recent years. Like all other commodity funds though performance can be volatile. There was strong growth last year, on the back of a commodity rally, but this has followed two years of lacklustre performance, compared to other asset classes.
Eating His Investment Cooking
Nevins, who lives in south London, says his SIPP is mainly invested in multi-asset funds, run by Architas, the multi-manager investment company where he works as a senior investment manager.
He says: “This is the core of my savings. The tax breaks on pensions are really much better than ISAs, so it makes sense to maximise these first.”
He adds: “I spend my day researching investment ideas for clients. It seems to make sense to invest in the portfolios I know best. I’m looking at the long-term with my SIPP so can afford to be a little more aggressive.
“I try not to meddle with these funds too much. I don’t think it pays to be buying and selling different funds frequently. Timing the market is tricky. If you are out of the market even a short period of time this can have a big effect on your overall returns if you’ve missed some of the best days.”
As well as the multi-asset funds, he also invests in Architas Diversified Real Assets fund.
Nevin says: “This portfolio invests in a range of real assets that include infrastructure energy projects and student accommodation. These can offer predictable returns and a steady cash flow and are often less sensitive to economic changes.”
