Sarah Roberts is hoping her investment plans will not be set back too much by the current economic crisis.
Sarah — who got married last year — is looking to move up the property ladder, and move out of her flat: “We are looking for somewhere with stairs and a garden."While the moving plans may be put on hold at present, she hopes that keeping the lion's share of her savings in cash will mean the couple can move when the Covid-19 crisis eases.
She says: “We had been making regular savings into an Isa but we always knew these were short-term savings as we were looking to move house this year. Because of that, we disinvested everything in October last year, and switched into cash. So at least the money for a deposit is safe, and hasn’t been affected by the current market turmoil.”
A Long-Term View
Sarah, who works as an operations manager in High Wycombe, also has longer-term savings — in both an Isa and pension — which remain invested in the stock market. She is not looking to switch these into cash any time soon, particularly after the recent stock market falls: "If I sold now I would simply be crystallising losses. By continuing to invest on a monthly basis, I see this as a buying opportunity, but not I'm stretching myself more than I can afford."
Sarah invests around £300 a month into her Isa, which is split between two managed funds run by Chelsea Financial Services — the VT Chelsea Managed Aggressive Growth Fund and the VT Chelsea Managed Monthly Income funds.
On top of this, she invests £250 a month into her pension, with her employer making further payments on top. This is split between a number of funds including those which invest in emerging markets, smaller companies and specific sectors. As Sarah is decades away from retiring, she is comfrortable taking on more risk here.
One of her best holdings in her pension has been Fundsmith Equity, run by Terry Smith. This Gold-Rated fund has delivered annualised returns of 13.44% over the past five years. Morningstar analyst Peter Brunt says the strengths of the fund include a long-standing manager and a disciplined investment approach. He adds: “The investment philosophy is to buy and hold, ideally forever, high-quality businesses that will continually compound in value.”
Specialist Investment Options
Elsewhere, Sarah also invests in more specialist funds, including Pictet-Water, TB Amati UK Smaller Companies and Kotak India.
The four-star rated Pictet-Water invests in companies across the globe operating in the water sector. It has been a steady performer over the longer term, with annualised returns of 8.79% over the past 10 years. However, like more conventional equity funds it has also seen returns hit by the recent market downturn, and is down almost 20% over the past year.
TB Amati UK Smaller companies is another good long term performer, with annualised returns of 11.23% over 10 years. This strong performance has helped it get a Bronze Morningstar Analyst Rating. However, the recent economic crisis has particularly hit many smaller and medium sized businesses, and this fund is down 35% since the start of the year.
Sarah keeps an active eye on her portfolio and, although she is looking to the long term, is prepared to sell holdings if they fail to deliver. “I did have a holding in Woodford Equity Income," she says. "The manager, Neil Woodford, had an excellent reputation, so like the Fundsmith Equity fund I thought this would be a fund I would buy and hold for the long term.” The now-famous demise of the fund has left many investors out of pocket abut the experience hasn’t put her off investing in so-called "star fund managers", she says.
“This fund didn’t do well but I don’t think it’s fair to rat everyone in the industry with the same brush," explains Sarah. "However, I did get out before the fund closed. I might have a different opinion if my the money for my house deposit was tied up in there.”
Looking forward, she thinks the current crisis couldy change how some people think about investments, an expects an increased interest in certain sectors, such as biotech and also the technology sector: “You can see a lot of people working from home now, and technology is helping them adapt. This could be a real growth area for the future.”
