Glen Houseman adopts a “twin track” approach when it comes to his investments, splitting his money between low-cost ETFs and a number of direct shareholdings.
For Glen, who works in sales for the oil industry, this offers him the opportunity to diversify via index funds but also invest in higher risk shares that have a chance of beating the market and delivering “serious returns”.
Glen, who is in his early 50s, has been an investor for around 20 years. He mainly invests in Isas, as he has a pension through his job.
“Initially I started by investing in individual companies. Some where solid blue chip shares, and I still hold a couple of these in my portfolio. Others were far more speculative, and in many cases did not turn out to be good investments.
“However over the years, I’ve switched some of these assets into ETFs that track one of the main stock market indices. This seems to me to be a good way to get to get a return that is broadly in line with the market. It is certainly a better return than the money kept in my bank account.”
Glen’s ETFs are with a number of providers, including Vanguard, L&G and Fidelity. “I try to have money with a number of different providers, just in case there was a problem with one, although I don’t think this is a significant risk. Mainly I am just trying to keep fees to a minimum.”
High-Growth Shares
However, alongside this Glen also now holds a smaller number of shares which have the potential to deliver market-beating returns. “I try to invest in new industries or growth areas of the market. But over the years I’ve invested in quite a few companies that have failed to deliver on their potential. A good story does not always translate into good returns.”
Glen sees this as a hobby. “I enjoy researching potential holdings and tracking how they have done over time. The shares that have done well have certainly helped boost my overall returns.”
Two of his longer standing holdings are the insurance and pensions company Prudential (PRU) and Halfords (HFD), the car and cycling retailer.
Prudential has a 4-star rating from Morningstar, and its share price is currently trading below the fair value estimate of £16.
The company has failed to deliver sparkling returns for shareholders in recent years. According to Morningstar data investors are looking at total annualised losses of 1.51% over the past three years. However it has been a steadier performer over the longer term - with total annualised returns of 10.52% over the past decade. Glen says: “People are always going to need pensions and savings products. Pru seems to be one of the bigger names so I think this will be a solid long term holding.”
Halfords has been another steady performer, but the share price had already started to dip in recent years, prior to the pandemic. Glen was considering selling but is glad he didn’t. He admits though he was surprised just how well it has done over the past year.
“It has definitely been one of those companies that has benefited from the lockdown. I guess there has been a huge number of people buying bikes to avoid public transport. But I would not have expected the kind of returns of the past year.”
Morningstar data shows that at the start of 2020, shares in the company were trading at around 142p, and then fell to 64p following the FTSE’s Covid crash. But from this point they have climbed steadily and are now trading at around 430p per share.
Natural Resources Picks
Alongside these more mainstream holdings, Glen has also focused on number of mining and natural resources companies. He feels he knows a little about these sectors, given his background.
These can be high risk holdings though, and returns are volatile. For example Glen says he hold Rainbow Rare Earths (RBW). This is a mining company that is focused on the exploration and development of the high-grade Gakara Rare Earth Project in Burundi, East Africa. The company is mining for rare earth minerals, which are used in a number of new technologies, for example rechargeable batteries for electric cars, computer chips, wind turbines as well as catalysts for cars and oil refineries.
This company, which is listed on the London Stock Exchange, has delivered a a 408% return to investors over the past year, but over three years, investors have seen total annualised losses of 1.6% according to Morningstar data.
Glen is also invested in the natural resources company Pathfinder Minerals (PFP). This is another company involved in mining and exploration in Africa, in this case it is seeking to mine “heavy minerals” such as zircon and ilmenite. Again, investors have seen a positive return over the past year, with a total return of 38.1% on their investment. However, investors are sitting on losses over three, five and 10 year periods.
Glen has seen a better return from his holding in QinetiQ Group (QQ), which operates in the aerospace, defence and security sector. This technology-focused company, which for example has develops products and services for the cyber-security industry, has delivered total annualised returns of 10.82% for its investors over the past five years.
He is also sitting on a positive return from his holding in in Beeks Financial Cloud Group (BKS) - which operates a cloud-based trading platforms for the institutional investment market. Although shares can be volatile, Morningstar data shows it has delivered total annualised returns of 18.74% over the past three years, comfortably outperforming the 1.35% delivered by the FTSE100 over this period.
Glen, lives near Newcastle with his wife and teenage son. He hopes his Isa will provide some additional funds for when his son goes to university in three years time. “Mainly though I am hoping this will provide some additional funds for me and my wife when we eventually retire."
