Four defensive areas for your ISA
The UK officially entered recession on Thursday, 15 February 2024*. Although forecasters don’t ex...
Yesterday my husband turned thirty: a milestone I celebrated but at which he nearly cried. So naturally I’m writing about it! He has been worried about turning thirty since the day I met him more than seven years ago, and the day has finally come. The world did not end. Actually, nothing happened at all, except…
Recently, he’s found any excuse to leave a bar because it’s too loud or has too many people. He has regular back aches and pains, doesn’t know the name of anyone on the radio, found six (yes, he counted) grey hairs, and the days where he could drink whatever he wanted without a terrible hangover are long, long gone.
But one thing that doesn’t need to change much when you turn thirty is your investment portfolio. Chances are, if you had one in your twenties, it will be similar still and if you don’t have one then your thirties are the time to make your first investment.
How and where you invest has as much to do with your age as it does your attitude for risk.
‘To me – old age is always ten years older than I am.’
– John Burroughs, American essayist
When you’re investing early you have a much longer time to profit from stock markets – another lifetime or two in fact – not to mention the added bonus of all those years of compounding interest. Since you can take a long term horizon and don’t need the money for the next 30-40 years if planning for retirement, you could just stick to an all-equity portfolio with 95-100% in the asset class.
Risk and balance play a big part in choosing a fund. We suggest finding a geographical balance that represents the level of risk you’re happy with: something that’s especially important when you’re starting out. A range of US, UK, Asian and European equities should give you a nice mix of regions to start.
Investing in things you know and understand is a great way to feel more connected with your investments and keep a keen interest. With household names like Coco-Cola and Alphabet (Google) in its top 10 holdings*, Lazard US Equity Concentrated is an option in the North American region. Likewise, Schroder Asian Alpha Plus has over 6%* in technology stocks with big names like Samsung, Alibaba Group Holding and Tencent Holdings.
Looking to stick closer to home? GAM Star Continental European Equity has holdings in Nestle and French luxury goods LVMH* – so even if you’re not splurging on a Louis Vuitton handbag, at least you can hold a fraction of the brand in your portfolio.
If the idea of creating your own balanced a portfolio is too much for you, you might consider looking towards multi-asset fund. Jupiter Merlin Balanced Portfolio is an option for those who aren’t completely comfortable holding only equities. With over 75%** in stocks, you’ll benefit from a high level of equities with the added peace of mind of an experienced team and little bit extra diversification.
Interested in learning how your portfolio will change as you hit other milestones?
The peak earning years for many, your 40s tend to be when you start thinking about your finances and looking towards retirement more seriously. If you’ve been investing for the last 10-15 years, chances are you’re not hyperventilating at the idea of retiring and how you’re going to afford it.
All you need is a slight shuffle of your portfolio – although hopefully you’ve been checking in annually anyway. It might be time to consider adding a bit more diversification to your equity pot. Ever since our video series with Polar Capital Global Insurance manager Nick Martin I’ve been fascinated with the scope of areas that investing in insurance brings. Now every time I insure a parcel I’m sending for birthdays or gifts, I always think of this fund.
This might also be the time you start to think about adding in some absolute return funds to your portfolio. While still young in terms of retirement, a small allocation to these funds can give you a feeling of security. TwentyFour Absolute Return Credit led by manager Chris Bowie, aims to deliver a positive absolute return over a period of 3 years.
As retirement creeps closer and you start taking mental notes of winters spent in the sun, rebalancing your portfolio might include adding small allocations to property or fixed income funds. If you’ve got a second home in mind but not the cash to buy it, TM Home Investor is the only fund in the UK that invests solely in residential property and a hassle-free alternative to buy-to-let.
Noticing a lot of UK centric funds in your portfolio? Consider a more diversified allocation of property to UK and Europe through BMO European Real Estate Securities. Led by an experienced team, this fund has favourable risk/return characteristics.
You’ve retired – congrats! Depending on how you feel about risk, you might be thinking now is the time for fewer equities and more income. You might be looking to add to your exposure in property, fixed interest and absolute return funds.
M&G Corporate Bond is a bond fund that doesn’t stray too far from the benchmark. Looking to consider monthly income from your investments? Aviva Investors High Yield Bond has a mix of both UK and European bonds and speaks to any income focused investor with current yields at 4.72%***. Want more global exposure with big names like General Motors and Verizon? Artemis Global Income gives access to global equities with a 3.3%*** yield.
Or maybe you’re considering adding a multi-asset fund to take some of the pressure off. Premier Multi-Asset Growth and Income aims to provide equity-like returns with less volatility.
*Fund factsheet at 28 February 2019
**FE Analytics at 29 March 2019
***Figures taken from FE Analytics, 11 April 2019