As the Research Director of Chelsea Financial Services, Juliet Schooling Latter has access to more investment knowledge than most.
But she says this doesn’t mean there are easy answers when it comes to investing her own money. “I think understanding your own attitude to risk is key,” she says. “I invest through a pension, an ISA and hold another pool of non-tax wrapped investment funds and take a very different approach to each.”
At the moment she is looking to invest in more risky funds via her pension but is de-risking the holdings in her investment funds.
“My pension is obviously a long-term investment and I’m making regular monthly contributions into it. This means I’m less concerned about current market volatility. In fact, I want to try to make it work in my favour,” she said.
To this end she is looking to increase holdings in Latin America and Asia and – for the first time – invest in funds that offer exposure to frontier markets.
She says: “I already have some exposure to emerging markets, but haven’t invested in frontier funds before. There are not many around so I am currently weighing up the options.”
She added: “I’m expecting there to be another leg down in these markets. But by investing monthly this gives me the opportunity to buy at lower levels. You don’t have to be so worried about timing your investments.”
Choosing Funds for a Pension Portfolio
When it comes to buying emerging market funds she says she is looking for fund managers with a proven track record of ‘adding alpha’ – in other words outperforming the market, and their peers.
Funds like Aberdeen Latin America, and JO Hambro Asia ex Japan. The fund managers running both these funds have Bronze medal ratings from Morningstar analysts, reflecting analysts’ confidence in their ability to continue to outperform peers over the medium term.
The Aberdeen Latin America fund is run by a highly respected team, led by Devan Kaloo. According to Morningstar, “this fund remains a compelling choice within the Latin American universe.”
The JO Hambro fund - which has a four star performance rating - is managed by Samir Mehta who has spent almost 10 years running Asian portfolios.
Morningstar analysts rate his “distinctive approach, focusing on methodical stock-level research, favouring opportunities that display long-term growth prospects”.
They add: “We like the team’s willingness to back themselves which is reflected in a punchy portfolio of about 40 names that pays little heed to the benchmark.”
A Different Approach for Short-term Investments
But Schooling Latter takes a very different approach with the investments she holds outside of a SIPP or ISA wrapper. Here, she said volatile markets had definitely been more of a concern.
She says she’s hoping to move house in the near future, so may need some of these savings.
“I’ve tried to protect the value of what I’ve saved so far. This doesn’t mean simply moving it all into cash or bond funds though. I’m still very wary of bonds at present, and the returns paid on cash remain negligible. I still want my money to be working for me, I just don’t want to be taking too much risk with it.”
To this end she is invested in lower risk and absolute return funds. These include Henderson UK Absolute Return Fund and Premier Defensive Growth.
The Henderson fund, managed by Ben Wallace has a Morningstar Bronze medal rating. The fund has delivered on its aim of producing consistently positive returns, regardless of market positions. Since 2009 it has produced annualised returns of 6.4% a year.
Schooling Latter says: “I am not expecting the returns to be particularly high on either of these funds, but hopefully I will get more than I would from a building society account.”
She says it was not working in financial services which peaked her interest in investing; but rather she caught the investing bug from her parents: “They were the generation that bought newly privatised shares in the 1980s. It made me interested in investing.”
Schooling Latter invests in two Junior ISAs for her sons and hopes that this will get them interested in saving and investing too.
Investing in an ISA to Supplement a Pension
When it comes to her own ISA investments she says they sit somewhere between her two other pots. “My ISA is a long-term investment that will hopefully supplement my pension. As a result I am exposed to slightly higher risk funds than maybe the norm.”
Funds in which she currently invests include Liontrust Special Situations, Marlborough UK Micro Cap Growth and Axa Framlington Global Technology.
Rather than invest on a monthly basis she says she tends to top up these investments when prices fall. She says she prefers to stick with funds rather than invest in shares directly. “I have bought shares in the past but this hasn’t always been so successful.”
The difficulty can be knowing when to sell she says, particularly if prices have fallen.
“If a fund or share has fallen 10% I try to ask myself would I buy it now? If the fundamentals look sound, and you’d buy at this lower price then stick with it. If not, then it might be time to sell and reinvest your money elsewhere, even if this means crystallising a loss. Losing 10% is better than watching it fall a further 20% after all.”
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