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Investor Views: "Retirement Age is a Redundant Concept"

Private investor Duncan Burrows balances more speculative investments with a portfolio of actively managed funds

Emma Simon 1 June, 2017 | 9:55AM

Duncan Burrows, who works as a commercial planning manager, says his main investment priority is saving for retirement. He is now 44, and like many people his age, he’s not banking on being able to retire at a fixed point in the future.

The last time I used a cash savings account it was an ISA paying 7.4%

“The idea of fixed retirement age has become redundant for many people. The pensionable career roles of the past have long since evolved into a more flexible outlook,” he says. “I expect I’m not alone in constantly weighing up the work versus leisure time struggle.”

To this end he is trying to make the most of his SIPP investments balancing this portfolio with 5 to 10% of his savings in more speculative investments.

He says: “When I hit 55 I will have an opportunity to look at my SIPP again and consider taking a lump sum to do something different; investing in property, our own business venture perhaps.

“Working will continue after that age though; the golden retirement era my parents have enjoyed will be different for me, I expect to keep actively doing some revenue generation well into my 60s.”

Building Up a SIPP Portfolio

Burrows lives in Ilkley, West Yorkshire with his family, which includes his daughter Tizzy and dog Billy. He works for TD Direct Investing, and uses this company and Hargreaves Lansdown to manage his own investments.

Private investor Duncan Burrows with his daughter TizzyHe says: “Investing for me is all about capital growth, with a view to both my family’s longer-term needs and our short-term savings goals.

“I’m in the classic accumulation life stage. I’ve built up my SIPP through lump sum transfers from previous employments. I continue to build the SIPP’s capital through timely transfers over from my employer’s group pension when they reach a certain level.”

Alongside his SIPP and company pension the family home is his main asset. He adds: “I also keep some ISA funds topped up for short-term savings. I don’t keep much in cash, bar a bit of rainy day money.  The last time I used a cash savings account was a Skipton Building Society ISA paying 7.4%. It would certainly be nice to get that kind of return in today’s market.”

Picking a Good Fund Manager

When it comes to choosing his SIPP investments, Burrows says he looks at the style of the fund manager as well as the make-up of their portfolio, saying: “I like managers who stick to their chosen styles and have a solid rationale behind all of their holdings.”

With this in mind he says he has done well from investments in Finsbury Growth & Income investment trust (FGT), managed by Nick Train, and Castlefield UK Buffettology Fund, run by Keith Ashworth-Lord.

This Finsbury investment trust has a coveted Gold Rating from Morningstar analysts as well as a five-star performance rating.

Simon Dorricott, an analyst at Morningstar, says: “Nick Train's process is differentiated and has proved successful over a number of market cycles. He looks for unique and high-quality companies that offer a high and sustainable return on equity and low capital intensity and are cash-generative.

“The result is a concentrated portfolio with clear biases relative to peers and the FTSE All-Share Index. Turnover is low, reflecting Train's long-term approach and his buy-and-hold style. He only sells out if he no longer considers a company to be of sufficient quality.”

The Castlefield UK Buffettology fund also has a five-star rating, reflecting its strong performance in recent years. The fund seeks to achieve an annual compounding rate of return over the long term which is superior to the performance of the UK stock market. It mainly invests in a portfolio of UK equities, but will also invest in other assets, such as collective investment schemes, deposits, warrants and cash.

Stock Picks for Punchy Profits

Alongside these fund holdings, Burrows also invests in a range of individual shares. He says he is looking for investments that offer long-term value, steady growth and good dividend prospects.

Current holdings include housebuilder Galliford Try (GFRD) and SSP Group (SSPG), which operates fast food and restaurant outlets in airports, train stations and other ‘travel’ locations in various countries. Over the past year share prices in SSP have gone up by 44% according to Morningstar data.

Galliford Try has been steady long-term performer. Over five years its share price has risen by 23.53%, compared to an 8.42% increase in the FTSE 100.

Against this more defensive outlook he also invests in a handful of more speculative holdings, such as Gear4Music (G4M), an online retailer of musical instruments and equipment. This is a relatively new company, but its share price has risen by a staggering 291% over the past year. In contrast the FTSE has risen 23%.

In a similar vein he also has a holding in Atlantis Resources (ARL) – which is involved in the development of tidal power as an energy source. Over the past year shares in this company have been up by a 31%, although over three years the picture is more volatile, with shares losing 13% of their value.

Burrows says both Gear and Atlantis have shaken up their sectors in quite different ways, which has led to more recent share prices gains.

Painful Market Losses in the Early Days

Like most investors Burrows says that it has not all been plain sailing. He started investing in 2000, just as the dotcom bubble burst. He says: “Those early days were very much trial and error, but it was a valuable time learning to do better research, and developing a trading discipline to cut losses when required.”

Burrows admits his Achilles’ heel appears to be mobile technology stocks; be it an investment in BT Group back in 2000 (BT.A) or Globo in 2015 – which went into administration that year. Neither of which he made money on. “I seem cursed to never understand this sector properly or get my timing right,” he laments.

Burrows adds that it comes to choosing investments it’s important to research the fundamentals, and have an understanding of how consumers are using that business’ services. “It can also help to have a simple strategy to cut your losses,” he concludes.

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
Atlantis Resources Ltd36.25 GBP0.00-
BT Group PLC292.50 GBP0.00
Castlefield CFP SDL UK Bufftlgy Gen Inc2.51 GBP-0.72
Finsbury Growth & Income Ord742.54 GBP-0.73-
Galliford Try PLC1,350.00 GBP0.00-
Gear4music (Holdings) PLC705.00 GBP0.00-
SSP Group PLC531.50 GBP0.00-
About Author Emma Simon

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