Ash Mukherjee started investing after winning a school competition, at the age of 16. The stock market investing game let pupils pick a virtual portfolio to see who could generate the best notional returns.
He says: “It seemed like an extension of Monopoly, and it really piqued my interest in shares. I won the game and used some of the prize money to invest in a German equity fund.”
Now in his mid-30s, Ash has been an investor ever since – of course, these days his investment goal is to retire early, not win a competition. Ash, who as a management consultant and lives in London with his wife, invests through an Isa and pension.
He has tried to build a diverse portfolio, with investments spread across different geographical regions and sectors and considers these factors first when choosing a fund, before looking at its track record.
He adds: “Recently I have become more interested in the potential opportunities of investing in ESG-based funds.” These are funds where the manager takes into account environmental, social and governance (ESG) factors alongside traditional financial metrics.
Sustainable or ESG funds can help investors to avoid companies that have poor ESG scores, be it from having a high carbon footprint, or a poor record on board diversity or equal pay. But it can also mean these funds take a more positive view of companies that are engaging with this environmental and social issues, for example investing in companies that are developing green energy solutions.
Ash says: “To my mind, the real global threat is climate disruption and there is also a lot of investment opportunity here too. It would be great to see more companies offer up activities in that field — I’d happily invest in them.”
Taking a Global Approach
Where many investors are prone to so-called home bias – that is having the majority of their cash in the stock market where they live – Ash has tried to take a more global view ever since choosing that first German fund. He credit this approach with achieving good returns over the years; two of his best-performing funds have had a global remit and invested in technology-related stocks.
One of these funds is the silver-medal rated Polar Capital Global Technology. This fund, which also has a five-star rating, has delivered annualised returns of 22.56% over the past five years, according to Morningstar data. Morningstar analyst Samuel Meakin says: “Polar Capital Global Technology benefits from an experienced lead manager backed by a well-resourced team.”
The fund aims to offer investors exposure to the long-term growth prospects within the sector and to achieve this, Meakin says the managers consider the disruptive nature of new technology cycles and use a rigorous bottom-up approach to stock picking to identify growth areas within the industry.
Meakin adds: “The growth-centric approach means the portfolio is likely to be overweight mid- and small-cap stocks relative to its prospectus benchmark. It also leads to underweight positioning in the lower-growth, mega-cap incumbent technology firms.”
Alongside this Ash also invests in Fidelity Global Technology, another fund with a five-star rating from Morningstar. This has also delivered double digit returns in recent years, giving investors annualised returns of 20.85% over the past five years, according to Morningstar.
These have been good options while Ash has been trying to maximise the growth of his portfolio, but he anticipates switching to more income-based options as he gets olders. And, while these tech funds have helped boost the value of Ash's retirement fund, other investments have not been so lucrative.
Coronavirus Concerns
Some of his direct shareholdings in particular have been disappointing, he says. One of these is biotech firm Scancell Holdings (SCLP), which has been "one of the worst performing investments in my portfolio".
This smaller company — which is focused on cancer therapeutics — has seen its share price tumble in recent years, delivering annualised losses of 26.88% cent over the past five years according to Morningstar data.
Another disappointing investment, he says, has been Manolete Partners (MANO) which only floated on the Alternative Investment Market (Aim) at the end of 2018.
The company, a leading provider of funding for insolvency litigation, raised £16 million when it floated. Share prices initially rose in the early part of 2019, but have since fallen back and now stand at around 367p ,down from a high of 590p.
Ash says: “This company did seem to have a lot of promise but it hasn’t really delivered to date.”
When it comes to growth, Ash is concerned about current market conditions and has concerns about the effect Brexit might have on the UK’s economy not to mention the very recent turmoil in world stock markets on the back of the coronavirus epidemic. He adds: “Brexit is the biggest worry for the UK economy - and it’s a pity to see the nation’s fortunes being held hostage by people’s feeling, rather than facts.”
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