Graham Douglas, 66, lives with his wife Lesley near Harrogate, Yorkshire.
The couple, who are now both retired, have been investing for decades. As well as having a final salary pension – from his previous employment – Douglas also has ISA holdings and a small SIPP.
Their long-term goal is to leave an inheritance to their two sons, one of whom lives in Yorkshire and the other in Dubai. They also have two grandchildren.
Douglas invests in a wide range of assets, including funds, investment trusts, individual shares and property. He says: “When it comes to stock picking the results have been ‘steady’ rather than ‘inspired’.” This makes him think that funds and investment trusts have been a better bet for him, given his longer-term outlook.
Douglas says: “I am big believer in, and supporter of emerging market funds. The sector has been in the doldrums recently and I have used this as a buying opportunity.” He has also used market volatility to increase holdings in other higher-risk areas - such as Japan, the US and technology.
Some of these higher risk holdings have delivered good returns for Douglas over the longer term. He has seen a profit of 187% on his holding in Axa Framlington Global Technology, while Legg Mason Japan is up by 150% and Stewart Investors Indian Subcontinent Sustainability is up by 145%.
This Axa fund has a five-star rating from Morningstar, reflecting its strong performance in recent years.
Over the past three years this has delivered annualised returns of 25% for investors. The longer-term track record is almost as good with annualised returns of 19.98% over the past decade.
Meanwhile, Morningstar gives Legg Mason Japan a four-star rating. This fund has delivered annualised returns of 17.27% for investors over the past three years, and annualised returns of 19.09% over the past decade.
The Stewart Investors India fund also has a five-star rating, and Morningstar has awarded it a Silver Rating. This shows that analysts are confident that it will continue to outperform.
Morningstar analyst Jan Nel says: “The fund remains an excellent option in this space. It benefits from a strong, experienced lead and co-managers backed by a solid research team that follows a well-articulated and consistent process.”
Nel says that the key manager on the fund – Sashi Reddy – has been with the firm since 2007 and is one of the strongest managers working in this sector.
Niche Funds
Aside from these large funds Douglas likes to invest in a couple of more niche holdings as a diversifier within his portfolio. “I tend to buy these on a personal hunch and preferences.”
An example of one of these more niche funds would be Barings German Growth – another five-star rated fund. He says: “I am a long term believes in the German economy so have held this German fund for a number of years.
As the name suggests this fund invests in mainly large cap companies based in Germany. It has delivered strong returns since its launched in 2013.
Douglas says: “My selection process is varied, it is usually based on my liking for a geographical sector, industry or renowned fund manager.
“However a manager - or investment house - which is good in emerging markets be quite poor in European or UK markets, so one must be discerning and do appropriate research.”
He likes tried and tested managers setting up on their own, and is interested in both Terry Smith’s new investment trust Smithson (SSON) and the Mobius Investment Trust (MMIT) - launched by veteran emerging market manager, Mark Mobius.
Douglas already has a holding in Smith’s original Fundsmith Equity fund and this has been a strong performer within his portfolio. This fund has both a five-star rating and is has a Morningstar Analyst Rating of Gold.
“Thankfully I didn’t rush headlong into Neil Woodford’s new venture. I only have a holding in Woodford Income Focus, but this is down some 20% over the period I have been invested,” he says.
He adds: “Anything new I now invest in is only ever a toe in the water.” This, he means he has lots of holdings, up to 80, some of which are relatively small. “There are too many and I guess I should rationalise a bit, but a widely diversified spread gives me a feelgood factor.”
Relaxed About the Long Term
Douglas manages these various holdings through AJ Bell’s YouInvest platform, which he finds “easy and functional”: “As an investor I also bought shares in AJ Bell’s (AJB) recent flotation, for both my SIPP and ISA. Last time I checked these shares were up 71%.”
He adds: “My overall philosophy is that I can afford to take a bit more risk with my money, but this is tempered by substantial diversification. As I do not currently need to maximise the income I receive, or get urgent capital growth, I can be relaxed about the longer term.”
As a result he is not making significant changes to his portfolio in response to wider political or economic upheaval. “We are may be passing through some choppy water. I prefer to remain invested rather than second guess the market’s highs and lows.
“Matters like Brexit led me to avoid the UK market some time ago, but as the FTSE 100 sank below 7000 and continued all the way down to below 6,600 I thought this was a good buying opportunity for the longer term.
“It may dip again but I believe in 10 years’ time those recent purchases will have left me with a smile on my face.”
