Steve Beaman has had a successful career in the electronics industry, and says that working for a number of international companies has given him a more global outlook on his own investments.
Now in his 60s, Steve lives with his partner in Berkshire. He started investing more seriously five years ago, when the prospect of retirement loomed large in his mind.
“Before I often felt I was too busy and didn’t have enough time to look properly at investment options, with work and family being more immediate and pressing priorities,” he says.
Previously, Steve saved via building society accounts, though he also had a number of private and workplace pensions.
“A few years ago when I was reviewing my pensions with an eye to retirement, financial planning became a higher priority, particularly after looking at the fees and performance of some of my older pensions,” he adds.
After speaking to a financial adviser, he decided to consolidate some of his pensions into a Sipp. He left two of his final salary pensions where they were, however.
“I moved most of my private pensions into an AJ Bell stocks and shares Sipp, with the aim of taking more direct control on where my money was being invested,” he continues.
“I also moved money from a low-interest savings account into an AJ Bell stocks and share ISA, although I have kept some funds in short- and long-term fixed-rate savings accounts.
“I liked the fact this SIPP platform has a simple web portal so I can keep track of my investments and there is clear visibility on charges.”
Steve says he is now hoping to retire in the not too distant future.
A Good Handle on Risk
Originally, Steve was opting for more direct shareholdings for his portfolios, opting not just for companies active in the electronics world, but for businesses that supply them.
In the 40 years Steve has worked in the industry, he has worked for Korean, Japanese, German and Chinese manufacturing companies. He is currently working as a consultant for a Chinese brand looking to enter European markets.
This sector-specific approach means his initial investments were probably considered to be quite high risk. They were successful bets, but he decided to change his approach.
“As it turned out, they ended up being quite successful investments, but in the last 12 months I have moved to a more balanced approach following discussions with a financial adviser.”
Steve also shifted his money into a number global funds to boost diversification and lower risk.
“I take a balanced approach, across these funds I’ve exposure to industrials, banking and retail companies,” he says.
He adds that he is also “mindful” of fund fees, though he has tended to opt for active strategies, and fund-of-fund portfolios because they have performed well.
Currently, his best-performing funds are Fundsmith Equity, and two portfolios managed by AJ Bell: AJ Bell Balanced and AJ Bell Income. All three have performed well during the period he has been invested.
Fundsmith Equity has been hugely popular in recent years, and is run by veteran fund manager Terry Smith, who set up his own investment company just over 10 years ago. Fundsmith Equity is a global fund primarily focuses on larger-cap shares. It has a silver medal rating from Morningstar, and carries a four-star rating.
Morningstar analyst Robert Starkey describes it as “a highly structured and disciplined investment approach.”
“[Smith’s] investment philosophy is to buy and hold high-quality businesses that will continually compound in value,” he says.
“The resulting portfolio is highly focused, which can also lead to sector concentration and valuation risk. Returns may therefore look at odds with its broad MSCI World reference benchmark over the short term, and may be out of favour in periods where the market prefers lower-quality, cyclical stocks. We believe Smith has a good handle on the risks.”
The fund has delivered annual returns of 18.99% over the past 10 years.
The Setback
As its name suggests, AJ Bell’s Balanced fund is a multi-asset fund-of-funds that invests in more defensive assets (such as bonds, fixed-interest and cash) alongside equity funds. This can be an effective way of lowering volatility and risk in a portfolio. But lower risk can still deliver reasonable returns. Investors in this fund have seen annualised returns of 9.03% over the past three years. This earns it a Morningstar four-star rating for outperforming many of its peers.
AJ Bell Income, meanwhile, is a newer portfolio yet to establish a three-year track record. Both these fund-of-fund portfolios have a Morningstar quantitative rating (MQR) of neutral.
Steve says that while most of the investments he has made in recent years have delivered good returns, he has had one notable setback. He says he invested in the engineering company Tortrak, which specialised in “green” innovations, and specifically fuel-efficient vehicles.
Steve lost the money he invested in the firm when the FTSE-listed business went into administration.
“Fortunately it was a small amount, and I did enter knowing it was higher-risk,” he says.
He adds that, while he likes to look greener investment opportunities, companies like this highlight the inherent risks investing in any new technology.
