Roger Mundy’s first steps into the world of investment were made in the year 2000, just as the dot com bubble burst.
He says: “It was certainly challenging. I didn’t invest in a technology fund. But the international fund I’d put my money into simply got caught up in the subsequent fallout.”
Fortunately, this did not deter him. Each year he continued to make the most of his ISA allowance, and he now has a portfolio of 25 funds. Over this 15 year period he has made an average return of 9% a year.
“In many ways I am fortunate. I have the security of a final salary pension, so this has enabled me to take more risk with my investments,” he says.
“I’ve been pleased with the returns on my money. It’s a lot better than if I’d simply kept my money in the bank.”
Mundy says he prefers to invest in funds, rather than actively managing a share portfolio himself.
“I don’t have the time, nor the inclination, to keep an eye on things day-to-day. I’m happy there are professional fund managers to do this for me.”
Instead, he would rather spend his time pursuing my other interests; Mundy is a keen musician who plays for his local orchestra and a chamber music group.
He invests through the Fidelity FundsNetwork platform, and likes the comprehensive year-end summary they send each year.
“This gives me a clearer picture of the assets I am in, and how individual funds have performed. I don’t mind one bad year but if a fund consistently fails to deliver I’ll consider switching,” he said.
Fixed Income Funds That Deliver
Mundy has been pleased with the performance of Henderson Strategic Bond fund in recent years. This fund is managed by John Pattullo and his deputy Jenna Barnard, described by Morningstar fund analysts as a “talented pair of managers who have proved they can work effectively together”.
Morningstar gives the fund a Silver Medal Rating, reflecting this positive view. The fund has the highest five-star rating, which shows how well it has performed against peers in recent years.
As a strategic bond fund, the managers can take a flexible and unconstrained view, investing across the full fixed-income spectrum, although the fund has historically invested mainly in corporate bonds.
It is also a steady performer; in the last three, five and 10 years it has produced annualised returns of between 6 and 7%.
Mundy also invests in M&G’s Corporate Bond fund, managed by the Richard Woolnough, which earns a Gold Medal Rating from Morningstar.
Morningstar analysts say Woolnough has “provided his ability to pick turning points in market cycles, and we have a continued high regard for his approach, and use of M&G’s wider resources.”
Over the past five years it has produced an annual return of 6%, giving it a four-star rating against its peers.
Taking On Risk With Emerging Markets
At the other end of the risk scale Mundy also has money in Fidelity India Focus. This, according to Morningstar analysts is “one of the best Indian equity funds available”.
Portfolio adviser Sandeep Kothari has only been the key decision maker for this fund since September 2013 but he’s a veteran of the Indian equities market, and as a result the fund has a Silver Rating.
As with any emerging fund returns can be volatile. Mundy says that last year he saw a 48% return on this fund, but this was after “a couple of bad years in 2011 and 2012, where it lost money”.
“But I am investing for the long term so can afford to ride out these ups and downs,” he counters.
Morningstar figures show that over the last three years, investors have had annualised returns of 17% from this fund.
Currently Mundy also has investments in Japan and Latin America, although he recently sold his funds investing in Russia and Eastern Europe as he said returns were “consistently disappointing”.
Reinvesting Income to Boost Returns in Retirement
Mundy does not take an income from any of these funds, which he holds in an ISA wrapper, preferring to reinvest any dividends.
“Over the last few years I’ve been able to put more money into ISAs, thanks to a small inheritance and the fact that the mortgage has been repaid and my daughter has finished university,” he said.
“But I can’t see me having much more to invest. I’m leaving it to grow. I have my company pension and in a few years will get my deferred State Pension.
“I’ll look to take money from these investments when I’m in my 70s and 80s. Inflation may have reduced the value of my pension by then, so hopefully these investments will help me maintain a comfortable standard of living.”
How do you decide what funds or shares to buy? Do you have a fail-safe sell trigger? If you'd like to feature in Investment Views and tell us about your investment strategy please contact the Editorial team on editorial@morningstar.co.uk
.jpg)
