When it comes to his own finances Adrian Lowcock says his priorities are saving for retirement and building a nest egg for his two young daughters.
His children might be pre-school age, but they already have pensions: “Saving for my children is really around helping them to get a head start in life, either to support them through university or help them get onto the property ladder.
“But I have also invested into a pension for each of them, as I am a fan of long-term investing and the power of compounding.” This means a relatively small investment can increase substantially and will hopefully be worth a significant sum by the time his daughters, now aged one and four, come to retire.
Lowcock has worked in the financial services industry since he left university. He has previously worked at Hargreaves Lansdown and is now investment director at Architas Fund Managers.
He started investing when he began working in this sector. “Initially the main reason for investing was because I wanted to be financially independent. Being financially secure gives you more choices, whether it’s what you do with your career, or where you go on holiday.”
Lowcock says around 70% of his investments are into his pension, with the remainder in tax-efficient ISAs. He says: “We own our home so don’t see the need to have any further direct property investments. I also have a some cash savings in a rainy day fund.”
He mainly invests in funds for pension and ISA savings, although he has had some direct shareholdings in the past. He says: “Most of my more successful holdings have either been income funds or smaller company funds, although there has been one growth fund that has done exceptionally well of late.”
One of his more successful funds has been Marlborough UK Microcap Growth. As the name suggests, this fund, managed by Giles Hargreave, invests in smaller UK companies. It has a five-star rating from Morningstar, reflecting the fact it has comfortably outperformed its peers, and benchmark in recent years.
Most smaller company funds invest in companies of under £100 million assets, but Morningstar points out that a significant portion of this portfolio is invested in companies with a market cap of £50m or less.
Lowcock says: “This smaller companies sector seems to be an area which has performed well in recent years and Hargreave has an exceptional track record.”
He adds: “He combines stock selection with portfolio management skills. He runs a disciplined process and never seems to get over confident in his view of an individual stocks.”
Nick Train's Buy and Hold Mentality
When it comes to growth funds, Lowcock says one of his best-performing investments has been Lindsell Train Global Equity - another five-star rated fund. This fund has produced annualised returns of 18.09% over the past five years, comfortably outperforming many funds in its sector.
Lowcock says he likes the manager’s “buy-and-hold” mentality, which he says is rare in the current investment universe. He adds: “This low turnover approach means the manager can spend a lot of his time researching new ideas and really investigating them. The long term focus is closely aligned to my thinking.”
Manager Nick Train is also well known for running Linsdell Train’s flagship UK equity funds as well as the Finsbury Growth & Income Trust (FGT) both of which have a coveted Gold Rating from Morningstar.
When it comes to income, Lowcock says he has seen decent returns from Artemis Income, run by Adrian Frost. This fund has a Bronze Rating from Morningstar, and an additional four-star rating, reflecting its strong performance against peers.
Peter Brunt, an analyst at Morningstar says: “For investors seeking core exposure to UK equities with an above-market dividend yield and growing income stream, we still find this a solid product.”
The fund has been run by Frost since 2002. He was joined by co-manager Adrian Gosden in 2003, but Gosden left the group in 2016.
Although he has not been replaced, Brunt point out that Frost remains the senior manager, and has worked well with Nick Shenton, who joined as a third co-manager in 2014. He adds: “We believe that they remain a complementary partnership that can add value over the long term.”
Lowcock doesn’t need this additional income at present, so reinvests the dividends from this fund. Lowcock adds that this is one of his core holdings: “Its income focus makes it less risky and less volatile than other parts of the equity market.”
While these funds have delivered steady returns in recent years, not all his investments have proved to be so profitable. Lowcock points out that he invested in a number of companies during the dotcom boom that subsequently went bust.
This included a holding in Energis. He says: “Fortunately I only put £500 into it, so my losses were limited.”
Focusing on a Manager's Track Record
He says: “As a result I learned not to chase the trend or hype, and to ensure I do more extensive research — or find an expert instead who has the skills and resources to do this for you.” Lowcock has found that building a diversified portfolio of shares is both expensive and time consuming, which is why he has tended to concentrate on funds instead.
When it comes to choosing funds Lowcock focuses on the manager’s track record as well as their commitment to “a clear and repeatable process”.
Lowcock invests monthly into his pension, but also makes annual lump sum investments into his ISA. “This gives me the flexibility to invest more on market falls as and when they arise. But I don’t wait for these to happen.”
While Lowcock’s portfolio of core funds may seem a “steady” approach he still has the occasional flutter on more esoteric investments. For example he currently holds a “small amount” in crypto-currencies, but adds: “This is more for education purposes than anything else”.
He didn’t buy solely on the back of the rise in Bitcoin prices, but is interested to see how this new asset class performs, as well as getting some insight into how easy it is to buy or sell.
Lowcock says he takes a long-term view with the main holdings in his portfolio, and isn’t planning to make drastic changes in the wake of current economic uncertainty surrounding Brexit.
“Brexit is a big social and political issue, but long term I doubt it will have much impact on companies. Businesses will just adapt to the circumstances.
“The key is to be diversified across markets and strategies. For me proof of this strategy working was in 2016 my portfolio grew ahead of the Brexit vote, and continued to do so following it, even though the UK market tumbled and the pound fell.”
