Simon de Laat describes himself as an “unsentimental investor”. His portfolio is a broad mix of funds and direct shareholdings that embrace different styles of investing.
An active investor since the 1980s, he was a managing director in the food industry before retiring, but doesn’t have a particular background in finance: “I have always been a bit of a pension nerd and since I started working I have contributed to an occupational pension.
“I learned about finance and investing from my family. My grandfather started investing back in the 1920s, and my parents then inherited his modest portfolio, so this was something we were familiar with.”
In fact, de Laat still has holdings in some of the companies that his grandfather originally owned – some have been owned continuously and others bought and sold several times. One example of the latter is GlaxoSmithKline (GSK), which de Laat’s grandfather invested in when it was known as Glaxo Laboratories in the 1920s.
He says: “I wouldn’t hold onto any share simply because it has been a long-standing investment. You need to look at how it will perform in future. But it’s interesting that it is now a key holding in some of the funds I invest in. It shows how successful companies can weather changing circumstances and deliver good returns over the long term.”
Today, his portfolio consists mostly of funds rather than direct shareholdings; these encompass a broad range of styles and approaches from low-cost index funds run by Vanguard to actively-managed portfolios run by established managers such as Neil Woodford, as well as a number of investment trusts.
Buy and Hold With an Income Bias
With around 40 holdings in his portfolio, de Laat has a degree of diversification but, as he is no longer working, has “a distinct income bias”.
“I am a buy and hold investor,” he says. “I am not interested in trading on a day-to-day basis, or trying to spot gaps in the market, I’d rather build a portfolio of quality investments I can hold for the long term. I want to try to minimise risks rather than maximise gains.”
Among his holdings are the Woodford Equity Income fund, as well as the star manager’s investment trust Woodford Patient Capital (WPCT).
Although the former has lagged behind peers this year, de Laat is sticking with it: “The manager has a good long-term track record and you would expect a degree of volatility with this fund.”
Morningstar analysts appear to agree. The fund has a one-star rating, reflecting its relative underperformance over the past year, but it also has a Silver Rating, which shows analysts are confident it will outperform over the longer-term.
Analyst Peter Brunt says: “This fund remains one of our higher-conviction ideas in the UK equity-income space. It is managed by one of the most talented fund managers in the equity income sector at an investment boutique that focuses primarily on UK equity income.”
The fund applies the same investment approach with which Woodford created an impressively strong and consistent track record during his near three decades at Invesco Perpetual. Brunt adds: “The approach is best described as high-conviction, long-term, and contrarian in nature, and it sees him combine his macro views with bottom-up stock selection.”
Elsewhere, de Laat holds a number of investment trusts including Scottish Mortgage (SMT), Fidelity China Special Situations (FCSS), and City of London (CTY), which have all been stalwart performers.
Scottish Mortgage has a five-star rating from Morningstar, reflecting its strong outperformance in recent years. The trust, run by Baillie Gifford, also has a coveted Gold Rating, indicating that analysts expect it to continue to outperform in future.
Morningstar analyst David Holder points out that “this isn’t a trust for widows and orphans” as it has a relatively large exposure to unquoted companies – with up to 25% of its assets in these unlisted stocks.
Holder says: “The investment approach focuses on identifying high-growth companies and holding them for the very long-term to gain the benefit of compounded growth. These companies will often have been new entrants or disruptors into a region or industry.”
Fidelity China Special Situations also has a five-star and Bronze Rating, while City of London has a three-star rating.
FTSE 100 Big Names
When it comes to individual shareholdings, de Laat tends to focus on larger blue chips: “Given my income-bias it is, perhaps, not surprising that I have a reasonable exposure to companies like Royal Dutch Shell, BP, Diageo and Unilever.”
He describes these as steady performers. “If I can get growth of around 4% a year I am happy with that.”
He also has a preference for investing in companies within the food and drink sector an area, adding: “This is the area I have worked in all my life. I’ve dealt with people who work at these businesses and have a good understanding of the companies’ strengths and weaknesses and how they operate within their sector.”
Simon de Laat has a couple of company pensions but he manages his SIPP himself through AJ Bell. “At the moment I am not really adding regularly to these investments, just managing them for the long term. It’s all about yield at the moment, rather than growth,” he explains.
Despite economic and political uncertainties, the portfolio has remained “pretty unchanged” in recent years. He says: “At the beginning of this year there was a lot of doom and gloom about the UK market but is performing well at present. I don’t think it pays to try and second guess markets; if you are invested in quality companies these will hopefully deliver over the long term.
“Look at companies like BP. They were hit in the Deepwater Horizon crisis, but I guess it demonstrates the strength of businesses like this: they not only survive these problems, but a few years later they are still paying decent returns to their shareholders.”
