Andrew King has changed his investment strategy recently, swapping his individual holdings in UK stocks for a portfolio of global and emerging markets funds.
Now in his 60s, Andrew has previously cashed in his investments to buy a property and a new car, and is now investing to build up a rainy day fund which he hopes to spend or an overseas property or holidays. Despite nearing retirement, he wants to keep his money in the stock market because the interest rates on cash accounts are so low.
Andrew, who lives in Southampton and works supporting those with disabilities to find employment, made his first foray into the stock market on the advice of his mother. But where he has historically cherrypicked individual stock for his Isa and pension, he now prefers funds.
He says: “I am taking a more global view than I have in the past, where my investments have been focused on the UK. I now like to spread my investments worldwide and maintain a balance that slightly tilts towards risk.”
How I Pick My Global Funds
When it comes to picking funds, Andrew looks at a number of different criteria including past performance, the reputation of the fund house, and the track record of the fund manager. “I also sometimes look to invest in funds or companies in a particular sector or industry. But there are also times when I buy more on a whim,” he adds, pointing out that sometimes these punts perform better than the investments he spends time researching.
And while he also uses Morningstar Analyst Ratings to guide his selections, he does not currently include ESG considerations in choosing his funds, “though it is something my conscience suggests I should look at more in the future,” he adds.
Some of his portfolio is investing in AJ Bell’s range of ready-made portfolios, which offers exposure to a diversified spread of funds, tailored to different risk profiles. Andrew holds the AJ Bell Adventurous Portfolio, Global Growth Portfolio, and Balanced Portfolio. The trio have delivered returns of between 13% and 31% over the past three years.
Elsewhere, one of his most profitable holdings has been Stewart Investors Asia Pacific Leaders Sustainability fund, which has delivered strong returns both over the long and short term. According to Morningstar data it has delivered annualised returns of 10.19% over the past decade, 14.71% over the past five years, and 13.27% over the past three years.
Morningstar says increased conviction in the team that sits behind this fund has led to AnalystRrating upgrades from to gold from silver on its cheapest share class, while its more expensive share classes retain a silver rating.
Morningstar analyst Andrew Daniels says: “Overall, we believe the group to be among the best Asian equity investment teams. Alongside our conviction in the team is a well-codified, robust, and differentiated investment approach. The managers seek 30 to 60 stocks capable of delivering sustainable and predictable growth through its pricing power, franchise strength, and limited regulatory oversight.”
Emerging Market Options
Andrew has a holding in the Franklin India Fund, which has a three-star rating and Neutral Analyst Rating from Morningstar. This fund has delivered good long-term returns, producing annualised trailing returns of 13.65% over the past five years.
Morningstar says the fund continues to benefit from “an experienced and long-tenured lead manager and a sizeable investment team”. However, analysts express concerns that recent tweaks to the investment process have compromised the team’s “conviction-driven, quality-focused approach”. As such, its rating was recently downgraded from silver to bronze for the clean GBP accumulation share class.
Also in the emerging markets space, Andrew has a holding in JPM Emerging Markets, another fund with a Morningstar Analyst Rating of bronze. It has delivered annualised returns of 24.85% over five years and 17.53% over three years. With a big chunk of assets in tech stocks, the fund’s three largest holdings are Taiwan Semiconductor, Samsung Electronics, and Tencent.
Andrew, who is married and has two grown-up children, has been running with this global strategy for around four years and has no plans to change it currently, pointing out that these investments have performed better than any of his UK holdings, which are down by as much as 9%.
He says: “However I tend not to sell, but remain with an investment for the long term, trusting my initial decision to buy. Hopefully after a considerable time I will have made reasonable gains which I can then use as I wish.”
