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Investor Views: "I Used my ISA to Travel the World in Retirement"

Businessman Les Carvall used part of his ISA portfolio to fund the trip of a lifetime in retirement

Emma Simon 28 September, 2016 | 4:23PM

After selling the family business, Les Carvall said he tried to make the most of his new found leisure time. But soon became bored. Instead, he decided to plan a more adventurous jaunt: driving around the world in a Suzuki Jimny, a small four-wheel sports car.

“There’s only so much painting, gardening and pushing a trolley around the supermarket you can do,” he said.

“I called it the Ultimate Challenge. Initially it was just going to be myself and my wife, Vi. But we ended up with a team of fellow driving enthusiasts, all of whom were in their 70s, plus a film crew.” The route took them across Ukraine, Kazakshstan, Mongolia, China and Canada. 

“It was certainly an adventure,” says Carvall. “We attracted a fair bit of publicity and we even ended up meeting former Polish president Lech Walesea.”

Carvall set up and ran the family’s manufacturing business, and used the skills he developed as businessman to manager and oversee the trip.

Investor Les Carvell and his wife Vi

“We sought sponsorship to help with funding. I also set up a charity called Heaven Can Wait I’m Busy to help raise money for good causes.”

However, Carvall soon realised that he would also need to use savings to get the project off the ground. He spoke to his financial adviser about releasing some cash. “I’ve fortunate enough to have built up a decent pension, and a reasonable portfolio of investments during my working life. This made the whole thing possible.”

An Income Portfolio for Retirement

The couple have a multi-asset portfolio, which is mainly invested in ISAs. They take a regular income from these, which they use to top up their pension. Alongside this Carvall also has a drawdown plan, although he is yet to start taking an income from this investment.

He may be a more adventurous traveler; but the same gung-ho spirit doesn’t necessarily apply to his finances; both his ISA and pension plan are cautiously invested. Carvall says he is still looking for growth, but in retirement capital protection is also important.

Carvall uses a financial adviser Michael King, at Strategic Solutions, and is invested in a discretionary portfolio managed by Investec. Through this he invests in a broad spread of equity and bond funds including BNY Mellon Global Dynamic Bond, M&G Optimal Income, Jupiter Strategic Bond and Fidelity Moneybuilder Income among others.

BNY Mellon Global Dynamic has a focus on absolute returns and low volatility, which is conducive to long-term capital appreciation. As a result the income is low, but it can provide ballast in the global bond sector, where many funds are very volatile. Morningstar gives this fund a three-star performance rating. It currently generates a yield of around 1.2%.

M&G Optimal Income also has a three-star performance rating, and the manager, Richard Woolnough has a Silver Rating from Morningstar fund analysts. This is another global fixed asset fund, but one with more of an unconstrained approach.  It also currently has some exposure to equities.

Ashis Dash, an analyst with Morningstar says: “We retain our conviction in this strategy, which largely stems from our confidence in manager Richard Woolnough. As this fund doesn’t follow a particular geographic benchmark the manager is free to take significant active position, if they see over- or under- valuations. This fund has a yield of around 2%.

Jupiter Strategic Bond is another global fixed asset fund, but one with a higher yield, currently at around 4%. This fund has a five-star performance rating from Morningstar, and its manager, Ariel Bezalel, has a Bronze Rating.

The manager invests globally and finds value in areas where more constrained managers cannot invest. For example, he currently has long positions in Indian and Australian governments and is reflecting his inflation view through convertible bonds issued by gold miners. 

Fidelity Moneybuilder Income is a five-star bond fund, and its manager Ian Spreadbury has a coveted Gold Rating from Morningstar. Carlos Lucar, an analyst at Morningstar says: “In our view, this fund is one of the strongest sterling corporate bond funds for diversified and core exposure to this asset class.” He points out Spreadbury has a great long term track record and a robust investment process.

Checking in with the Professionals

Carvall meets up with his adviser three times a year to discuss how his investments are performing and whether they need to change tack.

“For example we had a discussion ahead of the EU referendum vote,” he says. “Although I’ve been involved in business all my life I’d rather leave the financial management to the experts. I have a financial adviser and an accountant and I trust them to look after my money. They have done a good job to date.”

He adds: “Hopefully my investment will continue to grow to provide a decent standard of living in retirement for myself and Vi. With any luck there will be enough too to help pay for my next trip. It might not be quite so ambitious, but I’m not ready to be content with golf and gardening just yet.”

What funds are in your ISA or SIPP? What have been your most successful investments to date? If you'd like to feature in Investment Views and tell us about your investment strategy please contact the Editorial team on UKEditorial@morningstar.com

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article
Security NamePriceChange (%)Morningstar
Rating
BNY Mellon Global Dynamic Bd EUR A Acc1.18 EUR0.30
Fidelity MoneyBuilder Income37.22 GBP-0.05
Jupiter Strategic Bond Acc98.72 GBP-0.02
M&G Optimal Income GBP A Acc211.24 GBP-0.01
About Author Emma Simon

Emma Simon  is a financial journalist, specialising in investment and consumer issues, writing for Morningstar.co.uk