Investor Views: "I’m the Family's Chief Financial Officer"

Private investor Carol Parsons has taken control of her family’s investments in a bid to boost retirement prospects

Emma Simon 26 April, 2018 | 1:58PM

Wall Street - US Investing

Carol Parsons describes herself as a wife, mother and ‘chief financial officer’ when it comes to looking after her family’s wealth.

Parsons, who is now semi-retired, worked in financial services for a number of years. This led to her taking a keen interest in investments, and she has been running the family’s finances for the past decade or two.

She says: “I don’t just sort out the bills, I manage our pensions and ISAs and make most of the investment decisions.

“My husband is less interested in the nuts and bolts of investing. He has a reasonable pension, from a previous employer, but lets me look after his other investments, which are consolidated within a SIPP.”

When it comes to her investment strategy, Parsons has a twin-track approach. “I have a portfolio of blue chip shares, some of which I’ve held for years. I favour those that pay decent dividends, and will top-up favourite holdings when prices dip.”

Active and Passive Approach

Parsons invests in both active and passive funds. “If I am investing in actively-managed funds I want to know that the manager has a good track record.

“But there are certain sectors where I think it makes sense to pursue a more passive strategy. This also helps to keep down the overall cost ratio on the portfolio.”  

Parsons says that she has always tried to ensure her savings are tax-efficient, and has invested in both pensions and ISAs.

In the past she has tried to maximise her ISA allowance each year, although reduced earnings have meant she is not able to contribute as much in recent years.

She also has a well-funded SIPP, which was given an additional boost following the sale of a property.

She is gradually moving this windfall into the market in stages. She says her SIPP is invested with AJ Bell, where there is the option to keep funds in cash.

Parsons says: “Currently I have only invested about 50% of the cash available. I am waiting for a more decisive dip to add to my positions.” Her share portfolio tends to be focused on UK stocks, although many of these FTSE 100 companies earn a substantial proportion of their earnings overseas.

Japan Outperforms

But the funds within her portfolio have a more global outlook. These have delivered some of the best returns in recent years she says.

Her best performing fund to date has been JPMorgan Japan Equity. She has also seen strong returns from Fidelity Asia.

JPMorgan Japan Equity Fund has a five-star rating from Morningstar, reflecting its strong performance in recent years, relative to its benchmark.

However, Morningstar analyst Don Yew has some reservations about this fund. Yew says the manager, Nicholas Weindling, is a relatively experienced investor in Japanese equities and has run this fund since October 2012. But Yew adds: “We would like to see him execute the investment process with greater consistency.” According to Morningstar this fund has delivered annualised returns of 15.98% over the past three years.

Fidelity Asia is another five-star performer, and has a Bronze Rating from Morningstar.

Morningstar analyst Mark Laidlaw says that although there have been recent changes at a senior level at the parent company – Fidelity International Limited –  he says Fidelity Asia “is in safe hands”.

Laidlaw adds: “Teera Chanpongsang is one of Fidelity’s veteran portfolio managers within its Asian equities investment team. He took over control of the strategy at the start of 2014 and had big shoes to fill following the retirement of Allan Liu, and has shown thus far he’s comfortably up for the task.”

Going Passive in the US

When it comes to US holdings, Parsons favours passive funds. She has holdings in the Gold Rated HSBC American Index, as well as Vanguard US Equity Index, which also has a coveted Gold Rating.

Morningstar analyst Monika Dutt describes this Vanguard fund as “a very cheap one-stop solution for access to the whole US equity market”.

Dutt adds: “It is difficult for active managers to outperform US large-cap benchmarks, so taking a passive investment approach to this asset class makes a lot of sense.”

Parsons says that over 20 years she has built up a “reasonable” investment portfolio for herself, and her husband. “We’ve stuck to the basics, by trying to save what we can from earnings, investing regularly in the stock market, keeping an eye on fund costs, and re-investing our dividends.”

She adds: “I have previously worked in financial services, but not for a fund manager. But helping other people get to grips with their budgeting and finances, led me to take a closer look at our own spending and savings.”

Parsons hopes to be able to continue to work part-time for a number of years. “I want to continue investing for our future. Hopefully this will provide a solid foundation for when we do stop working completely.”

 

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
Fidelity Asia W Acc1,189.16 GBP-1.15
HSBC American Index C Acc5.61 GBP0.04
JPM Japan Equity C (dist) GBP118.37 GBP-1.44
Threadneedle UK Smaller Coms Z Acc1.85 GBP-0.20
Vanguard US Equity Index Acc447.40 GBP-1.02
About Author Emma Simon

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