'My £200 Investment is Now Worth £19,000'

Investor Views: Long-term investor Adrian Ritchie has seen the price of oil and pharmaceutical stocks rise significantly over the decades  

Emma Simon 5 May, 2021 | 2:47PM
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 Adrian Ritchie, who is now retired, has been investing in shares for fifty years.

Adrian, who lives with his wife in Brighton, says one of his first investments was in BP, and he still holds shares in the oil company today.

He says: “A the time his brother-in-law invested in BP (BP.) through his company, but could not afford to keep these shares, so transferred them to me in about 1972.

“This cost around £200 at the time, but is now worth about £19,000 with dividends re-invested.”

While this has been a long-term holding, Adrian was forced to take a more serious look at investing after the company he worked for went into liquidation in the late 1990s. “My pension was frozen so I realised I needed to look at investing for retirement more seriously. Fortunately the local authority were running investor seminars which I joined, and both the advice and friends I made from this were invaluable.”

Today Adrian, who is in his 70s, says that he still has a couple of company pensions and outside of this he is mainly invested in Isas. His wife also has an ISA portfolio and both of them also have a significant investment in Premium Bonds.

When it comes to his Isas, Adrian has a “strong preference” for direct shareholdings and investment trusts. “I research potential holdings myself, through reading the newspapers and thinking about what is going on in the world more generally. I also read investment magazines from time to time.”

He adds: “I do try to keep an eye and costs and have chosen the platform I use on this basis. I use Interactive Investor as the fees are very competitive.”

Reliable Dividends

Overall Adrian says that he and his wife invest in about 30 holdings across their Isa portfolios. Adrian tends to favour shares that pay reliable dividends, which he has always then re-invested. “Over the long term this has helped deliver very positive returns for me,” he says.

One of the mainstays of his portfolio has been the Alliance Trust (ATST) investment trust. This is a global investment trust that predominantly invests in the shares of other large cap companies.

In the past decade, the trust has been through something of an upheaval. In 2016, the well-known fund manager Katherine Garrett-Cox stepped down from managing this Dundee-based trust after a bruising battle with a Wall Street based hedge fund.

However the performance of the trust has remained steady and it has continued to deliver long-term returns for shareholders. According to Morningstar figures the trust has delivered total annualised returns of 16.58% over the past five years and 12.31% over 10 years (based on share price rather than NAV).

Individual Shareholdings

When it comes to individual shareholdings, Adrian says he has seen good returns from a number of blue chip shares including AstraZeneca (AZN), British Land (BLND) and Aviva (AV.).

The pharmaceutical company AstraZeneca has delivered strong returns over the past decade, consistently outperforming the FTSE 100.

Morningstar analysts point out that the company, which has a 4 Star Rating, has build “a leading presence in the pharma and biotech industry on patent-protected drugs and a developing pipeline that build up to a wide moat.”

Morningstar figures show that over the past five years it has delivered total annualised returns of 17.44% to shareholders, significantly more than the 6.33% total return seen on the FTSE 100.

Insurance company Aviva has also delivered reliable returns over both the shorter and longer term. Morningstar points out that the company, which is involved in the insurance, pensions and savings market, does not have an economic moat.

However over the past five years it has delivered total annualised returns of 6.8% for shareholders, marginally more than the FTSE 100.

Greggs Shares Have Been Volatile

Adrian says he appreciates that individual shareholdings can be volatile. Just before the pandemic, for example, he invested in the high street bakery and take-away food chain Greggs (GRG). Shares in this company had risen rapidly in recent years, but this trajectory was de-railed by the lockdown, forcing shops to close.

Share prices in this company more than doubled between 2014 and 2018, and then rose sharply from £13.80 per share at the start of 2018 to £24.24 at the start of 2020.

However while prices fell back again – to a low of £12.11 in mid 2020 – they have since recovered to pre-Covid levels. Shareholders are now looking at a 28% annual return year on year.

Across this extended five-year period shareholders have seen an annualised total return of 19.39% according to Morningstar data.

Adrian is planning to stick with this investment for now, and is pleased to see it recover. He says: “I like to pop into Greggs now and buy goods to share with family and friends — Belgian buns are a favourite and it all helps the share price!”

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