Investor Views: My Funds Have Done Better Than Stocks

Private investor Steve D’Souza has had good returns from biotech, financial and India funds, but individual share purchases have fared less well

Emma Simon 7 March, 2019 | 8:31AM

Laboratory work

Steve D’Souza and his wife Penelope have a range of SIPP and ISA holdings.

D’Souza, who sells software to banks, has been an investor for about 35 years. Like many, he says his first forays into stock market investing were the privatisations of the 1980s.

Since then he has built a portfolio of individual shareholdings and funds.

He says: “We are hoping that our SIPP will help fund our pension. We also have a number of ISAs which we have taken out over the years, which are our savings.”

Given his job, it is perhaps not surprising that D’Souza has a number of holdings that invest in the technology and finance sectors.

This includes both Polar Capital Biotech and Jupiter Financial Opportunities.

Polar Biotech has a five-star rating from Morningstar, reflecting its strong performance in recent years against both its benchmark and peers.

This global healthcare fund, managed by David Pinniger, was launched in 2013. Over the past three years it has delivered annualised returns of 18.24% to investors.

Jupiter Financial Opportunities is a three-star fund. This fund, run by Guy de Blonay, invests in companies that operate in the financial sector. This includes banks and insurers, as well as fintech companies moving into this space.

This sector was hit in the immediate aftermath of the 2009 financial crash but has delivered steady returns for investors in more recent years. According to figures from Morningstar, this fund has delivered annualised returns of 14.24% over the past three years.

D’Souza says: “When buying shares I try to invest in companies that are dividend plays, with some upside for growth. When it comes to my fund holdings I tend to focus more on growth stocks.”

While some of his holdings may look higher risk, he does try to diversify his holdings where possible.

To help with this diversification D’Souza has a holding in Kotak India Midcap

This is another fund that has delivered strong returns in recent years, and it has a four-star rating from Morningstar.

Kotak run a suite of funds investing primarily in Indian-based companies and securities. This fund aims to achieve long-term capital appreciation by investing at least two-thirds of its assets in mid-sized companies that are either registered in India or a significant portion of their business derives from there.

The fund has delivered annualised returns of 15.37% over the past three years and annualised returns of 21.83% over a five year time frame.

Timing Has Hit Returns

Not all of his holdings have been as successful. As D’Souza points out, often this is to do with timing. He has recently re-invested in Biome Technologies (BIOM) - an innovator and supplier of biodegradable natural polymers.

This small company, which employs 21 people, has seen its share price grow strongly since 2017. But D’Souza points out that he initially invested back in the 2000s, when again shares prices rose strongly before collapsing again in midway through the first decade of the millennium.

Share prices still stand well below the levels reached more than a decade ago. D’Souza says he was interested in green investing and could see the potential of a company like this. But he admits that the timing wasn’t ideal.

Morningstar data show that investors in Biome Technologies have seen annualised total returns of 21.49% over the past five years, but over 10 years there is a very different picture, with investors enduring annualised total losses of 9.11%.

D’Souza says that he is concerned about climate change, but also wants to try and ensure that his money is invested in companies that are tackling this issue, and devising innovate and technological solutions to reduce our reliance on carbon fuels.

This isn’t the only issue he has concerns about. “I am worried about Brexit, and interest rates rises and the problems of an ageing population.” All have the potential to derail established investment strategies, but they may also present some investment opportunities as well.

D’Souza says other less lucrative investments have included an investment in Stanley Gibbons (SGI). The company is involved in trading collectibles, and is probably best known as dealers of rare stamps.

However, while share prices in the company climbed between 2008 and 2014, they suffered a dramatic reversal of fortune in 2015. Shares are now priced at 2.88p, significantly below 380p they were trading at in early 2014.

D’Souza says: “One thing I learned is that just because you like stamps does not mean you should necessarily you should invest in companies that trade in this sector.”

When it comes to funding both his SIPP and ISA, D’Souza says he tends to invest a lump sum at the beginning of the tax year, and then make monthly top ups into these savings plans.

 

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.

About Author

Emma Simon

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

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