'My Sipp Funds Are Earmarked for Travel'

Investor Views: Private investor Paul Wilson is hoping his Sipp will allow him to go travelling when he retires

Emma Simon 28 July, 2021 | 11:29AM
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Paul Wilson has been an active investor for 30 years. “Being an accountant I have always enjoyed learning about different businesses and trying to spot the next investing opportunity.” Although he admits this hasn’t always worked out in practice.

Paul, who is now in his 50s and lives in Gloucestershire with his wife and daughters, mainly invests in self-invested personal pensions (Sipps), as pensions are more tax efficient than most other investment vehicles. He says. “They are also a lot more flexible now in terms of access under the new rules."

“I also have a few Premium Bonds and have also dabbled in a few crowd-funding investment, which have been a bit hairy, but good fun.”

He says: “I am primarily saving for retirement and hope these funds will allow me to travel with my wife.”

Paul holds his Sipp with AJ Bell and mainly invests in funds. He says: “I try and select a good mix of funds, which includes OEICs and investment trusts.

“I use these to try and cover different geographical regions plus specialist sectors, such as property and private equity.”

Funds Over ETFs

He tends to favour active funds rather than passive investments. “For me it’s all about the long-term performance of the funds in the sector I want to invest in. Ultimately they need to beat the market index, other you might as well invest in a low-cost tracker fund.”

A number of his funds have certainly delivered when it comes to this outperformance. One of his most successful holdings over the years has been Scottish Mortgage (SMT), Baillie Gifford’s flagship investment trust.

Scottish Mortgage is a popular investment trust that has delivered outstanding returns in recent years, with investors seeing annualised returns of 36.63% over the past five years (based on share price). The trust has a Silver Analyst Rating from Morningstar.

However, Morningstar analysts warn its high growth and highly leveraged portfolio means that its performance may be volatile, which may make it less suitable for risk-averse investors. It adds that it is “reassured” by the trust’s experienced management team from Baillie Gifford, led by James Anderson and Tom Slater.

Paul says: “I love the fact that this is a long-term conviction fund.”

This isn’t the only fund to have delivered in recent years. Paul has also seen good returns on Threadneedle European Select Fund.

This OEIC has a Bronze Rating from Morningstar, as well as a 5-star rating, reflecting strong growth in recent years relative to peers. The fund has recently undergone some changes, with veteran manager David Dudding taking a step back and Benjamin Moore being promoted to lead manager. However Morningstar analysts say the fund’s solid process and continued input from Dudding should see it continue to deliver for investors.

Morningstar says that the fund’s portfolio shows a consistent bias towards companies with wide economic moats when compared with peers, in other words companies whose business models remain well-defended from competitors. This approach it says has led to outperformance with lower volatility than the index and better capital protection when times are tough, such as the first half of 2020, during which relative performance was very strong.

Sticking With the Woodford Trust

Not all of the funds in his Paul’s Sipp have been such reliable performers though. Paul has previously invested in Woodford Equity Income: the fund run by the former star fund manager, Neil Woodford which collapsed in 2019.

Paul also invested in Woodford’s Patient Capital investment trust, now run by Schroders and known as the Schroder UK Public Private Trust (SUPP). He has kept this holding.

This trust has continued to follow the same remit under its new managers, investing in a portfolio of both quoted and unquoted companies. Iti aims to deliver returns of around 10% a year over the longer term.

Investors have not seen these kind of returns to date, although the performance of the trust has improved significantly over the past year.

Over a five year period the investors in this trust have seen annualised losses of 19.27% — based on share price, according to Morningstar data. The trust’s net asset value (NAV) recorded annualised losses of 15.61% over this same period.

Over a three year timescale the picture is even worse with annualised losses of 27.52%. However over the past year investors has seen a more positive 19.23% return. But it is worth noting though this is again based on the trust’s share price. Over this period the  trust’s NAV has fallen 11.97% according to Morningstar data.

Paul has learned valuable lessons from some of the investments he has made. He says: “I previously invested directly in a company called Motion Posters.” This company was involved in advertising screens in railway and tube stations.

Paul says: “I could have doubled my money if I had sold my shares at the right time. Unfortunately I held on too long and the company went into administration. As a result I think I have learned to try and take some profits along the way if my investments are doing well. I’ve also learned to be a bit more cautious and not necessarily believe all the marketing hype.”


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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