"I Steal Ideas from Star Managers"

Investor Views: Retired investor John Scrivens tries in use the philosophy of his favourite fund managers in his own investment portfolio

Emma Simon 26 November, 2020 | 9:04AM
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Investor views

John Scrivens describes his investment strategy as “unoriginal and simple”, but it’s working for him.

Now retired from a career as a medical microbiologist, John tries to harness his scientific training to help him select investments objectively. He also tries to use in his own portfolio the ideas of three successful fund managers he admires: Terry Smith, Nick Train, and Keith Ashworth-Lord.

“My financial aim is to achieve investment returns,” says John. “I tend to view this as an intellectual challenge, with success or failure being measured as profit or loss.”

John, who lives with his wife in Middlesex, has been investing since he was a teenager, when his father passed on his enthusiasm. “I remember the stock market crash of 1973/5 where the FTSE30 declined by more than 70%,” says John. “It was a useful lesson in the downside of investing and probably helped shape the conservative approach I take.”

In the earlier part of his life, John has relatively little money to invest; he and his wife were trying to repay their mortgage while bringing up their two children. But he spent a lot of time reading about successful investors and the stock markets and found this useful. He adds: “Having a small amount of money does not stop you learning about investing. One important lesson I learned is to adopt a proven strategy that you are happy to follow in both bull and bear markets.”

With that in mind, he has tried to harness the philosophies of Smith, Train and Ashworth-Lord in his own portfolio. “In my opinion, these managers have a lot in common as they all use a bottom-up ‘buy and hold’ approach and invest in a concentrated portfolio of high-quality, resilient, profitable companies with a long-term record of re-investing profits to deliver superior returns,” says John. “If I had to summarise the approach it would be: investing in winners.”

A Buy and Hold Approach

John first invested in Nick Train’s investment trusts a decade ago and subsequently added funds run by the other managers soon after they were launched. Today he holds eight different funds managed by the trio: Gold-rated Fundsmith Equity, Silver-rated Finsbury Growth & Income Trust (FGT), Lindsell Train UK Equity, Lindsell Train Global Equity (both Bronze-rated), CFP SDL Buffettology and CFP Free Spirit.

And as well as investing in the funds run by these managers, he also tries to apply their principles when choosing individual stocks. John says: “I monitor new purchases made by these funds and in many cases, copy their purchases.” During the last six months this has led him to copy Smith's purchases of Nike (NKE) and Qualys (QLYS), both listed on US stock market, and Ashworth-Lord's purchase of London-listed Softcat (SCT), and Aim-listed Codemasters (CDM) and EKF Diagnostics (EKF).”

He says: “I use their approaches to buy high quality faster growing companies, which might be too ‘racy’ or too small for the funds these managers run.” The strategy also led to him investing in Fevertree Drinks (FEVR), Experian (EXPN)and Halma (HLMA) before they made it into any of the funds’ portfolios.

Of course, John is concerned he’s putting all of his eggs in one basket by employing a single strategy. He hopes the fact that his investments are spread across a variety of sectors will reduce his risk. “However, I could be hit hard if investors became less attracted to top quality, successful companies which achieve excellent returns on their capital employed, but I am willing to take this risk,” he adds.

John also acknowledges that some would find his approach quite “boring”, as he doesn’t trade often and copies other people’s ideas. He says: “It certainly lacks the excitement of investing in the likes of gold mining, oil exploration or earlier stage technology companies or responding rapidly to news driven share price movements.”

Stellar Returns

One benefit of his strategy, however, is that it doesn’t take up a lot of his time. And it has delivered excellent returns, too: six of the funds with five-year track records have produced annualised returns of more than 14% over that period.

And while John has tried to diversify and combine some of his knowledge of biotech and life sciences into his investing, there simply aren’t many UK companies that fit the bill. He has, however, invested in a number of US life science companies including Amgen (AMGN), Illumina (ILMN), Regeneron Pharmaceuticals (REGN) and Edwards Life Sciences (EW).

He says: “The best performers have been Illumina and Edwards Life Sciences, which were purchased in 2017 and are up 52% and 156% respectively, but all these holdings are showing gains since purchase so this approach is showing promise.”

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