David Hart started saving into an endowment policy when he was just 17. He is now retired, and has more recently opened junior ISA (JISA) accounts for his grandsons.
He says that, while financial products have evolved over this period, a focus on long-term saving and investment has helped build a good financial foundation for his family over the decades.
David initially had a career in the Royal Navy and says he now benefits from the pension he earned in this role. In the latter part of his career David — who now lives in Dorset with his wife — worked in the City. That also helped inform some of his more recent financial decisions.
Trust Me
“I started investing in a modest way in about 1982 with individual shares through a county stockbroker,” he says.
“I got more serious in 1985 as a child of the ‘Big Bang’ and invested in many of the Thatcherite privatisations.” Returns from these helped keep him interested in investing.
Over the years David gradually switched from investing in shares and IPOs to holding funds. However, he points out that, initially, there were often far higher fees associated with many mutual fund investments.
“I started to invest in funds and even in the early days was aware of the benefits of diversification, though I stuck with the main names in the industry,” he says.
“I also took some financial advice, though this didn't turn out too well. Initially, I had to pay a heavy price for fund investments, but the advent of platforms made investing much more straightforward and marginally cheaper.”
In recent years David has favoured investment trusts, which still offer the benefit of diversification, but often have lower fees, and, like shares, are listed on the stock market. He also still holds some blue chip shares, such as the mining company Rio Tinto (RIO) and Legal & General Group (LGEN).
David and his wife both have ISA and SIPP accounts with Hargreaves Lansdown. Within his ISA, David tends to hold income-focused investments, while his SIPP is geared towards growth-orientated investments. He does not anticipate needing an income from his SIPP, so is hoping he will be able to pass these onto his children at some point in the future.
David says he is interested in ESG themes, although they do not currently govern his investment strategy. Some of his ISA holdings reflect his interest in new technologies and emerging markets, in particular. They include Law Debenture (LWDB), Keystone Positive Change (KPC), HgCapital Trust (HGT), as well as Finsbury Growth and Income Trust (FGT).
Law Debenture is an investment trust that has a long-term track record of delivering steady growth and income and holds both larger and smaller cap companies. It has a three star rating from Morningstar, and currently yields around 3.38%. According to Morningstar data, it has delivered annualised returns of 19.91% over the past three years, and just over 13% over both five- and 10-year periods.
Keystone Positive Change is an investment trust that focuses on companies whose products or services contribute to building a more sustainable future. This isn’t primarily focused on start-up businesses though, but rather UK large cap equities. It has delivered modest returns in recent years, with investors seeing annualised returns of just 2% over five years and 6% over the past 10 years, according to Morningstar data.
HgCapital Trust, meanwhile, is an investment trust primarily invested in unquoted businesses. As a higher-risk vehicle, it has delivered larger returns for investors in recent years. The trust has a five-star rating from Morningstar, whose data shows investors have enjoyed annualised returns of 26.62% over the past five years (based on share price, rather than NAV).
Bulls And Bears
Finsbury Growth & Income is a popular investment trust that has delivered sterling returns in recent years. Its primary share classes have Bronze Analyst Ratings from Morningstar, while the cheaper ‘D’ share class have Silver Analyst Ratings. It also has a five-star performance rating.
It is run by Linsdell Train UK, which Morningstar says “benefits from a highly-experienced and long-standing manager [Nick Train] and a unique, well-structured investment approach”.
However Morningstar analysts do add a word of caution.
“As a result of attracting a significant level of assets on the back of exceptional performance, there are some concerns over its ability to maintain the purity of its process.”
Over the past five years it has delivered annualised returns of 9.55% to investors, though it is currently trading on a 4% discount.
As a longer term investor, David has experienced both bull and bear markets.
“I’ve lived through a number of market meltdowns over the years, which have proved challenging. But I react with much more equanimity these days to market reversals, and dividend payments help me be more patient.
“Looking back I wish I had got into investment trusts more seriously and earlier as they are a great way of diversifying and are much cheaper than some other investment vehicles.”
Finally, he adds that technology has made the whole process much easier.
