Peter Smallbrook is relatively new to investing: “In the last five to 10 years I’ve tried to educate myself more about investing and finance. I’ve realised I need to start saving seriously if I want to have a secure future.
“I don’t think the Government will be able to provide decent pensions in the future. If you want some financial security in old age, I believe you have to invest for this yourself.”
Smallbrook, who is in his 30s, works in research and public health. His work has led him to work in a number of different countries, and he has been involved in malarial vaccination programmes. He says this experience has fed into his investment strategy.
“I wanted to ensure that, where possibly, my investments were sustainable. There are a number of challenges facing our planet at present and I think companies that come up with solutions to these stand to profit in the future.”
One of his first investments was into the Sustainable Pioneer Fund, part of the fund range run by Triodos Bank. The fund has a three-star rating from Morningstar, reflecting average perfomance against peers. Over a three-year period it has delivered annualised returns of 12.63%.
Smallbrook says: “I have been very happy with the performance of this to date. It shows me that you don’t have to sacrifice returns if you want to invest more ethically.”
The fund invests in smaller and medium sized companies and has a global remit. It focuses on key themes such as climate protection and renewable energy, environmental technology, and on companies that are pioneers in corporate social responsibility within their sectors.
He adds: “I previously had a savings account with Triodos Bank and I liked the philosophy behind the company. This was the first investment I had made, but it has proved successful and has encouraged me to invest elsewhere.”
Looking at Broader Trends
Smallbrook has taken a similar thematic approach with his other investments. “I’m not looking at individual companies, or following share tips," he says. "I want to look at broader trends and longer-term perspectives which I think will shape the world over the next few decades.”
To this end Smallbrook has been investing in developing economies, rather than the UK, Europe or the US.
He says: “I’ve got money in Latin America, India and South East Asia. I think these are countries where there is the upward potential given the economic development and growth of the middle class. I also think there’s interest in these economies on issues like renewable energy.”
Collegiate Approach
At the moment he invests in a combination of active and passive funds to access these regions, including Aberdeen Latin American Equity, which has a Morningstar Bronze Rating. This fund also has a four-star rating, showing that it has outperformed peers in this region.
Morningstar analyst Simon Dorricott 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 19-strong global emerging-markets team, which is headed by seasoned investor Devan Kaloo.”
The head of Brazilian equities for Aberdeen, Peter Taylor, is the fund’s lead manager.
As with any emerging market fund, returns can be volatile, but this fund has delivered a return of 64% in 2016, compared to a benchmark performance of just 7.8%. However, it lost money in the three preceeding years - although in most cases these losses were marginally less than its benchmark, according to data from Morningstar.
Smallbrook is also invested in Fidelity India Focus, another highly rated fund. This fund has a coveted Silver Medal rating from Morningstar.
Mark Laidlaw, an analyst at Morningstar, says: “Fidelity India Focus is one of the best ways to tap into the long-term growth prospects offered by the expanding market.
“Amit Goel was appointed portfolio manager in April 2016, but portfolio advisor Sandeep Kothari is the key man behind our deep conviction that this fund will continue to ourperform peers.”
Fidelity uses this experienced local decision-maker to provider advice on its investments. This is partly due to regulatory issues. Laidlaw says: “Kothari is an impressive investor who has over two decades of Indian market experience.
“He previously led Fidelity’s onshore Indian equities team for a number of years prior to the firm’s decision to exit the domestic business in 2012. His insights are amongst the most impressive we have come across in this sector, and he has equally shown to be humble when faced with mistakes.”
Vietnam and China Choices
Smallbrook has invested in a number of funds that offer exposure to other emerging markets. These include Vanguard Emerging Markets - a passive fund - and Fidelity China Focus, plus VinaCapital (VOF) an investment trust largely invested in the Vietnamese market.
Fidelity China Focus has a five-star rating from Morningstar, reflecting its very strong recent performance. It has a Bronze Rating which shows that analysts are confident it will continue to outshine peers.
Laidlaw says: “Fidelity China Focus continues to stand out within the China equity Morningstar Category. Jing Ning is a capable manager who has 17 years of investment experience, 10 of which were dedicated to managing China-equity portfolios.”
VinaCapital has a four-star rating, reflecting its strong growth recently.
Smallbrook says he primarily invests in ISAs, though he does have some pension provision through his workplace. “I invest a fixed amount each month. My plan isn’t to buy and sell but to invest and hold for the long term. I think these areas and these funds all have the potential to deliver good long-term gains.”
He adds: “I’d also like to invest in funds that are concerned with the theme of an ageing population and invest in companies and sectors that are working to find healthcare and other solutions to tackle this issue. But I’m not sure how best to act on this at present.”
