The best and worst investments of the past decade

As we wrap up our 10-year celebrations at FundCalibre, we wanted to take one final time to reflect on how far we’ve come. The past decade in financial markets has been marked by unprecedented events, volatility, and transformative trends. From the lingering effects of the 2008 financial crisis to the rise of digital currencies, the financial landscape has undergone significant changes.

The stock market experienced dramatic highs, driven by tech sector booms and a flood of retail investors, but was also rocked by global challenges like the U.S.-China trade war and the COVID-19 pandemic. Meanwhile, sustainable investing gained traction. Over the past ten years, these developments have reshaped investor strategies, global market dynamics, and regulatory responses.

And yet, a number of extremely talented managers have successfully navigated these choppy waters and are now celebrating 10 years at the helm of Elite Rated funds. We had a chat with some of them about what they have learned over the past decade, as well as their best and worst investment decisions.

Gary Robinson, Baillie Gifford American (return over tenure: 394.80%*)

“Over the past decade, my best investment decisions include buying Amazon in 2014, which became a ten-bagger, and investing in Shopify, Abiomed, and Tableau, which also yielded significant returns. Shopify stands out as a particularly impactful investment, despite initial debates over its valuation.

“The worst decisions often revolved around missed opportunities, or “sins of omission,” such as not investing in Shopify earlier. Selling Chipotle was a tough call that, in hindsight, might seem like a mistake given its subsequent success, highlighting the challenge of decision-making based on process versus outcome.

“The past ten years have taught me valuable lessons. One key takeaway is the importance of recognising the potential of great companies to continually innovate and unlock new growth avenues. Companies like Tesla, NVIDIA, SpaceX, and Amazon exemplify this by not only dominating their initial markets but also expanding into new territories, such as autonomous driving, energy solutions, and cloud computing. This journey has underscored the significance of not underestimating a great business’s capacity for growth and the transformative power of exceptional company cultures in creating unforeseen opportunities.”

Jamie Jenkins, CT Responsible Global Equity (return over tenure: 223.26%*)

“A highlight from the past decade has been our investment in companies operating at the frontier of advanced industrial technologies. A prime example is Keyence, a Japanese manufacturer of equipment facilitating factory automation. The company addresses the global challenge of a shrinking global labour force, while enhancing manufacturing efficiencies and reducing waste. Over 10 years, Keyence has nearly quadrupled its revenues, maintained an operating margin exceeding 50%, and delivered outstanding shareholder returns. It remains a top holding in the fund 20 years after our initial investment, showcasing the potential for the compounding growth of innovative companies.

“In the Consumer Discretionary sector, the decade-long collision between traditional retailers and e-commerce has dramatically shifted consumer behaviour and market share. While we have generally achieved positive returns, this sector has been challenging due to our focus on long-term winners. This approach occasionally led us to hold onto specific names for too long.

“We’ve learned there is a fine balance to strike, between staying committed to companies with strong track records and knowing when to step back to avoid overpaying for quality and growth. Navigating this path is challenging but rewarding, and it remains a privilege to do so on behalf of our clients.”

Rhys Davies, Invesco Bond Income Plus Limited (return over tenure: 65.87%*)

“Two key lessons I have learnt are the effectiveness of simple rules and the value of teamwork. When the pandemic hit, my portfolio exposure to high yield bonds was already low because yields were relatively low. By following this simple rule of aligning risk with reward, the portfolios had plenty of firepower to snap up opportunities during the ensuing period of volatility. Meanwhile, a series of team discussions was crucial to our understanding of the pandemic, a new subject matter for all of us! Portfolios were further prepared before markets fell precipitously. Having a collegiate, flat structure, where all views are valued, is another important lesson I have learnt in fund management.

“One of my worst investments must be the subordinated bonds of Credit Suisse, which were wiped out by the Swiss regulator. Whilst we were aware of the risks, we did not expect that. However, the holding was small (well below 1% of the portfolio) because of the known risks – again, following some simple rules! But the Credit Suisse ‘debacle’ also provided some of the best opportunities to buy bonds during the knee-jerk market reaction. This kind of contrarian investing is something we pride ourselves on.”

Alexandra Jackson, Rathbone UK Opportunities (return over tenure: 48.65%*)

“Perhaps my worst investment decision was to move from working on a global fund to running a UK-only fund just over 10 years ago, or so it seemed at the time!

“The relative underperformance of the UK and its origins are well versed by now. But within that context, there have been some great individual stock stories, with world-class returns to report. Names we bought when they were minnows, and are now FTSE 100 stalwarts, include alternative asset manager Intermediate Capital; design software company AVEVA Group (not FTSE 100 anymore, having been bought by Schneider); industrial distributor Diploma; and student housing firm UNITE Group. They’ve all delivered great share price returns and nice dividends (25 years of unbroken dividend growth in the case of Diploma) while they were mid-caps, and importantly, this continues even now they are classed as large-caps. It’s a good reminder why we like our multi-cap mandate.

“Fuel cell business Ceres Power also stands out, adding materially to fund performance, as it went up eight times after we bought it. There’s a case for it being one of my worst investment decisions too though – we didn’t take enough profit at those lofty multiples, riding an oversized position back down again. A good lesson – when you buy a stock expecting it to go up a lot, and it does, take the win!”

Get more fund manager reflections in our lessons from a decade of FundCalibre

*Source: FE Analytics, total returns in sterling, from start of manager tenure in 2014 to 23 September 2024