Investor Views: Will These Funds Get Me on the Property Ladder?

Private investor Daniel Beecroft is using a range of growth-oriented funds to help him save for a house deposit

Emma Simon 4 October, 2018 | 2:03PM

will these funds get me on the property ladder investing house deposit

At the age of 24 Daniel Beecroft already has a portfolio of funds and individual shares. Beecroft, works in the financial services industry as a client relationship manager, and says this has helped him understand investments.

He says: “I am investing for growth over the medium to long term. The aim is to save and to grow these savings for a house deposit.”

Beecroft invests monthly and is using regular payments to build a balanced portfolio.

His portfolio is currently invested in a range of equity funds, although he also has some higher-risk direct shareholdings too. He uses the Charles Stanley investment platform to invest in both these funds and shares.

As he is still young and is taking a longer-term view Beecroft says he can afford to take a bit more risk with some of these holdings. He says: “I am still growing this portfolio and am looking to add exposure to Europe, Emerging Markets and the US in the next few years.”

Smaller Company Shares Deliver Growth

One of his best-performing funds has been Marlborough Special Situations, managed by Giles Hargreave.

This fund invests in UK smaller companies, and has a growth remit. Beecroft says: “It has great long-term performance and has delivered the best returns to date in my portfolio. It also has surprisingly low volatility given that it invests in small companies.”

He believes this is in part due to the large number of stocks held with the fund. It currently has around 185 separate holdings within the fund portfolio. Beecroft also points out that a number of individual holdings have enhanced the fund’s performance.

For example it holds the drinks manufacturer Fevertree (FEVR). This company makes premium mixers for the restaurant, pub and retail trade and have enjoyed significant share price gains in recent years.

Marlborough Special Situations has a five-star performance rating. According to Morningstar data the fund has delivered annualised returns of 15.15% over the past five years.

The fund follows invests in smaller companies, new issues and companies going through a difficult period with good recovery prospects.

Large Cap Stocks to Balance the Portfolio

As this is a UK smaller companies fund, Beecroft also has a holding in Fundsmith Equity. This is a global fund, focused primarily on larger company stocks.

The fund has a Gold Rating from Morningstar analysts, and is run by manager Terry Smith. It also has a five-star performance rating. It has delivered average annualised returns in excess of 20% a year for the last five years.

Morningstar analyst Peter Brunt says: “This is one of the strongest options for investors seeking exposure to high-quality global equities.”

He adds: “Smith's investment philosophy is to buy and hold, ideally forever, high-quality businesses that will continually compound in value.”

The fund has a low turnover of stock each year as the manager takes a very long-term view on holdings.

Brunt adds: “Investors should be aware that this is a very high-conviction and long-term approach. There are elements of sector concentration and valuation risk in the portfolio.”

However, he adds that Smith appears to have a “good handle” on these risks. He adds that the fund has benefited from “style tailwinds” since launch, but adds that the manager has delivered significant value over and above this.

Beecroft says: “My best investment in terms of returns is Marlborough Special Situations. I have held the fund for around five years.

“Fundsmith Equity is a more recent acquisition, but its past performance has been exceptional and in the time I have held the fund it has been equally as impressive.”

Adding Risk with Thematic Funds

Elsewhere Beecroft has diversified into more niche, but higher risk areas. This includes some thematic funds. He has a holding in Pictet Robotics, which - as the name suggests - invests solely in companies that derive the majority of their earnings from robotics and related technology

The fund invests primarily in larger cap stocks and, according to Morningstar data two-thirds of its holdings are US-based stocks. Its biggest holdings are Siemens (SIE), Alphabet (GOOGL) — the parent company of Google — and Qualcomm Inc (QCOM).

The fund relatively recently at the end of 2015. It enjoyed very good returns in 2016 and 2017, of 27.5% and 42.7% respectively, but has only delivered returns of just over 1% this year to date.

Beecroft also dabbles in some higher risk individual shares, saying: “I have a penchant for local ambitious and speculative projects.” This encouraged him to invest in Sirius Minerals (SXX).

This company is a producer of multi-nutrient fertilisers. Beecroft points out that the company is mining potash in North Yorkshire. This is one of the key ingredients found in fertiliser. It is also developing one of the biggest deposits in the world of polyhalite. Beecroft says: “In the time I have held it, it has moved from the AIM into the FTSE 250. The scale of the project is huge and ambitious and holding the stock is a rollercoaster with bumps along the way.”

The share price of Sirius Minerals rose from 10.75p in early 2016 to 45.50p six month later. Shares then fell to 18.75p by the end of that year.

Prices have risen again over 2018, to a high of 37.48p, but now stand around the 29.42p mark.

Beecroft says he is prepared to tolerate some volatility in shares like this, which he hopes have the potential to make decent returns over the medium term.

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
Alphabet Inc A1,346.87 USD0.00
Fevertree Drinks PLC2,090.00 GBP0.00
Fundsmith Equity I Acc4.47 GBP-1.06
Marlborough Special Situations B Acc1,811.74 GBP2.27
Pictet - Robotics HI CHF169.60 CHF-0.71
Qualcomm Inc87.83 USD0.00
Siemens AG117.78 EUR0.00
Sirius Minerals PLC3.55 GBP0.00

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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