David Trigg may be retired, but this hasn’t stopped him making pension contributions. Instead of drawing an income from his investments, he is accumulating cash for later life.
He explains: “I am still contributing into my SIPP and ISA each year. I am in receipt of a couple of defined benefit pensions and try to make savings from these. The two main drivers for this are to leave an inheritance and pay for care, should I need it when I am older.”
Trigg, who is now widowed, has been investing for around 30 years. Over this period he has invested in a wide range of assets including funds, stocks, National Savings products and cash.
He also invested in property but sold this more recently, saying: “I wanted to put the investment into something more liquid.”
A Gold Rated Fund Delivers Optimum Returns
Trigg holds a mix of active and passive funds as well as direct shareholdings within his SIPP and ISAs. He says: “I am more focused on fees these days, so have been looking more at ETFs. I am also very dividend-focused within my portfolio although I reinvest this income.”
One of his best performing fund holdings has been First State Greater China Growth Fund. This fund earns a Gold Rating from Morningstar fund analysts.
Morningstar analyst Germaine Share says this fund “remains as one of our best ideas for equity exposure to the region”.
She adds: “Top-notch portfolio manager Martin Lau has 22 years of investment experience and has led this strategy since its inception in December 2003.”
The fund invests in a relatively concentrated portfolio of 55-60 stocks, with the team applying a “tried-and-tested” bottom-up stock selection process to look for quality companies that deliver sustainable growth at attractive valuations. The fund is “agnostic” towards benchmarks, has a low turnover and an absolute return focus.
This has helped it deliver impressive returns. According to Morningstar data the fund has a five-star performance rating, gaining an average of 17.17% every year between its launch and the end of November 2017. This ranks it first amongst its peers. Morningstar also notes that it is one of the most “downside-resilient” funds in this sector, which given the volatility of markets in emerging markets, is another bonus for investors.
Trigg, who lives in London, formerly worked in the airline and travel industry. But although he is now retired he is increasing, rather than decreasing, his exposure to higher risk assets. He is choosing to invest in frontier and emerging markets.
He says this is partly in response to Brexit, but he also believes that these are stock markets that have potential to deliver growth for the future.
Pharmas and Fullers
Trigg has also seen good returns from a passive fund, L&G Global Pharmaceutical Index. As the name suggests this fund tracks the performance of some of the largest international healthcare and pharmaceutical companies. Over the past three years it has delivered annualised returns of 16.37%.
Trigg has also profited from his investment in brewers Fuller Smith & Turner (FSTA), which he has owed for nearly 30 years. This company made good gains up to the 2007, and then saw its share price rise strongly between 2009 and 2015, although performance has slipped and been more volatile since then.
As well as strong gains from this investment, Trigg says that as a shareholder he’s also benefited from discounts on their products in their managed pubs and hotels.
Mistakes Along the Way
However, Trigg says that not all his investments have been as lucrative. “My worst investment was probably in Lloyds Banking Group (LLOY).” He invested in this company at around the same time as Fullers, but the returns have been very different.
The share price of the UK’s largest bank crashed during the global financial crisis of 2008. Prior to this, shares were trading at a high of £3.79, but they plummeted to 27p per share after the bank had to be bailed out by the Government.
There has been some modest recovery since then, but shares are still only trading at around the 72p mark –a world away from the £6.64 price that Lloyds’ shares were trading at in the late 1990s. Trigg says that he cut his losses and sold the shares a year ago.
Morningstar equity analyst Derya Guzel says Lloyds is trading below its fair value estimate share price of 84p, although there is high uncertainty with this share.
Guzel says: “After its massive restructuring, which started in 2011, the bank emerged as a low-risk domestic retail and commercial bank. While the current economic and political outlook, mainly driven by the United Kingdom's decision to leave the European Union, could affect its operations more than others’, we believe Lloyds can weather any short-term volatility.”
Trigg says: “Along the way I’ve learned not to follow the crowd. I invested in technology at the top of the bubble, so this was a very valuable, if painful lesson. I am now quite contrarian, although I don’t always buy what others are selling. But I agree with the principle and it makes me question my own decisions more thoroughly.”
“Tax System Needs Reform”
When he was working Trigg invested on a monthly basis, but now invests lump sums when he has the savings. He invests his SIPP and ISA holdings through AJ Bell.
He adds: “I would like to see some overhaul of the tax system. I’d like to scrap taxes on savings, CGT and inheritance tax, as this is simply taxing money twice. I think it would make sense to see more financial education in schools, not only on the mechanics of saving and investing but using money as a tool.”
Trigg adds: “I come from a family of savers and will probably be still saving the day I die, which might be a bit silly. However, I do spend some of my savings, particularly on quality travel.
“But although I don’t have any of my own children, I have a wider family, including my sister, niece and nephew, and would like them to benefit from any inheritance.”
