"My Investment Portfolio has Plunged"

Investor Views: Retired investor Jim Knighton is considering selling his shares after the Covid-19 sell-off sent his shareholdings spiralling

Emma Simon 5 August, 2020 | 12:06PM
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Investor views

Jim Knighton decided to keep some of his money invested when he retired two years ago, but his portfolio has plunged so badly since the Covid pandemic that he is now considering getting out of the market.

Jim has decent pensions from his 40-year career which saw him work in banking initially and later as a manager within the NHS. He wife has four years left until she finishes work so he was hoping to keep his investments growing until they could enjoy their retirement together.

He split this money between investment trusts and direct shareholdings and is currently sitting on some pretty heavy losses, particularly from his individual shares.

The broader based investment trusts have fared better, Jim says, and in future he wants to move more of his money across into these managed investment vehicles. However, he is reluctant to sell too much at present and crystallise his current losses.

How I Choose my Investments

Jim, who lives in Lincolnshire, has always had an interest in finance, although he is relatively new to investing. He says: “I have had an interest since I undertook my banking qualifications in the 1980s. But apart from some small regular savings plans, which were invested for my daughters at university, I never had enough spare cash to invest.”

When choosing where to put his money, he tries to research company shares and funds thoroughly: “I read articles, look at company finances and broker or analyst suggestions, and think about the timescale over which I want to invest,” he explains.

Fees are also an important consideration for any fund investment, as well as its track record. “The latter gives me an insight into how the fund is managed,” says Jim. “However, that said, there are examples of star fund managers getting it wrong by trying to beat the market all the time, so I think you still have to use you judgement and try and balance out your risk.”

Jim holds most of his investments in an Isa and also has a dealing account with AJ Bell, through which he invests in the investment trust Henderson Far East Income (HFEL). The trust, he says, provides a regular income, which helps supplement his pension income.

This trust has a three-star rating from Morningstar. Over the past five years it has delivered total annualised returns of 7.33% to investors (based on its share price rather than NAV). However, over three years annualised returns are just 0.31% - significantly below the trust’s benchmark.

Still, at least this holding is positive territory, Jim points out. With his direct shareholdings he is currently sitting on losses of around 30%. He says: “I lost money when Interserve (ISVJF) went bust.” The government contractor collapsed in June 2019 after a rescue deal fell through. “However, I was able to effectively claw back some of these losses through buying and selling some of my other holdings for a profit,” Jim adds.

An investment in Tritax Big Box (BBOX) has fared better, however. The property company, which invests in long-term commercial leases, has enjoyed buoyant returns in recent years, with investors enjoying total annualised returns of 4.93% over three years and 9.96% over five years, according to Morningstar data.

Jim has also seen a positive return from his holding in insurance company Direct Line Group (DLG). This stock has a four star-rating from Morningstar and has delivered annualised returns of 3.12% over five years. Over three years, however, investors have endured total annualised losses of 2.01%.

My Share Portfolio has Plunged

Jim also has a small stake in the technology company Micro Focus, (MCRO). According to Morningstar data, investors have endured annualised losses of 37.34% from the stock, and an eye-watering 80.54% loss over the past year alone.

However, this has still performed better than his holding in four-star rated Centrica (CNA), the energy company that grew out of the old British Gas. “This has been my worst investment to date,” says Jim. “I bought Centrica shares late last year as I thought it would be on the up.” Shares have, however, plunged in the wake of the coronavirus pandemic and subsequent fall in demand for fossil fuels. According to Morningstar data investors have seen total losses of 30%; this is on the back of negative returns over both a five and 10-year timeframe.

However, Jim is hanging on to his investments for the time being: “I intend to wait it out for a few years yet, if I can afford to. If the values recover, I may look to sell some of the individual shares and put the money into some broader investment trusts.”

And the experience has, he believes, at least helped him to become a better investor. Jim has even recently started helping a relative to invest and says: “They are sitting on much smaller losses than I am!”

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.

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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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