Like many investors, Merope Beddard has a number of different goals. As well as maintaining a rainy day fund, she’s saving for house renovations, putting money aside for her children’s education and also trying to build a retirement pot. With so many priorities to balance, it’s not wonder that keeping the cost of investment as low as possible is important to her.
In a bid to grow her money as much as possible, Merope, who lives with her husband and two children on the outskirts of London, is trying to maximise the amount she invests into both pensions and Isas. Having been an active investor for some 20 years, her portfolio now contains a range of funds and direct shareholdings.
Stick to What you Know
When it comes to selecting her investments, she tends to stick with names she knows. “I try not to get too forensic when it comes to looking at data on company performance or a fund manager’s track record,” says Merope.
That means her portfolio is made up of funds from the likes of industry giant Vanguard and shares in “FTSE big-hitters”. Merope says: “My mother has a really successful side hustle of giving share tips in up-and-coming companies, too, which have been a useful boost to my portfolio.”
And while Merope doesn’t get too bogged down in financial data, she does try to ensure that investment fees and platform charges remain low, so they do not eat into her returns.
Indeed, it was with this in mind that she opened an Isa with Vanguard last year when it first launched the account – the lowest priced on the market. She uses this to invest in the firm’s Lifestyle funds, a range of readymade portfolios created using low-cost tracker funds to a set risk level.
These funds are highly rated by Morningstar; Vanguard LifeStrategy 80% Equity fund has a coveted Gold analyst rating as well as a five star rating. The lower-risk options in the range – which have a maximum of 60%, 40% and 20% of their portfolios in equities – also have Gold ratings.
Morningstar analyst Rajesh Yadav says: “The success of Vanguard LifeStrategy 80% Equity lies in its straightforward and low-cost approach of investing in a diversified pool of bonds and equities, making it a sound long-term option for many investors.”
Merope has been happy with the returns and says the diversified nature of the portfolios has provided some protection from stock market volatility this year.
Elsewhere, Merope also has an Isa with Barclays Smart Investor as well as a self-invested personal pensions (Sipp) with James Hay. She says: “I’m glad I sorted out my pension around five years ago. I had three smaller pots that were incurring high charges and going nowhere fast.” Consolidating these in one account has made it easier to keep track of performance and fees while ensuring her portfolio remains diversified. Merope, who works for a boutique advertising agency, also has a workplace pension.
Successes and Failures
Among her stock holdings, an investment in the real estate investment trust (REIT) Tritax Big Box (BBOX) has been a particular favourite. The investment trust invests in so-called “big box” properties or logistics centres across the UK and rents them on long-term leases to big businesses. It has delivered total annualised returns of 10.61% over five years (this is based on share price rather than NAV), according to Morningstar data, and 6.38% over three years.
Merope also invests in mining giant Rio Tinto (RIO), which has a two-star rating from Morningstar. She describes it as a “feast or famine” share, delivering excellent returns over some periods, before struggling at other times.
And investment in Cineworld (CINE) has been less successful, especially with Covid-19 shutting UK cinemas for months. According to Morningstar data, investors have seen total annualised losses of 37.48% over the past three years, with an eye-watering loss of 82.74% in the last year alone.
Merope adds: “I also invested in the Restaurant Group (RTN) and just as I was trying to sell the holding, I was awarded another share through a reinvestment plan. So now I have one lonely share sitting in my portfolio, getting ever smaller.”
The firm, which owns popular restaurant chains such as Frankie & Benny’s, has been hard hit by the recent stock market turmoil and lockdown. Investors have seen total losses of 62% over the past year alone; that follows on from negative total returns over three, five and 10 year periods.
But despite a handful of poor performers, Merope has not changed her investment strategy, and she is not planning any changes as a result of the recent Covid-19 pandemic induced turbulence either. Like many people, however, she has found she is saving more money as a result of the lockdown, which she plans to use to boost her investments in the near future: “Saving money is much better than spending; it’s a more positive thing to do.”
