We’re pleased to welcome back Malcolm from Edinburgh who is sharing his experience as someone in retirement taking charge of their investments for the first time. This is part five of the series click to read parts one, two, three and four. 

In managing my retirement portfolio of 30 shares, currently divided between 12 in the FTSE 100, 13 in FTSE 250 companies and five from the FTSE AIM 100 index, the main challenge in recent months has been reviewing inflationary concerns relative to the possible bounce back effects of Covid recovery.

REVIEWING PERFORMANCE

Faced with such challenges, I have tended towards caution which is why so much of my portfolio comprises slow and steady value shares. I am naturally more bearish than bullish with my outlet for growth mostly occurring through more modest technology-based investments in FTSE, AIM 100 shares; shares that alas have not been very successful of late.

Part of me, of course, would like to be the investor I am not. I would like to have a mix of economic understanding and boldness that would lead me to invest in companies which are already performing at their highest ever share price. To see the potential for further growth and commit to investing on this basis is impressive. The closest I have come thus far is buying Ashtead (AHT) at near its highest price; an investment which is so far working well.

In recent months, my reviews of performance have frequently focussed on how well companies have fared over the last two years i.e., before Covid and in recovery from Covid.

My best investments e.g., Howden Joinery (HWDN), Kainos (KNOS), Persimmon (PSN), DS Smith (SMDS), SSE (SSE) and Spirax-Sarco Engineering (SPX) all seem to have fared better at managing the volatility of the last two years and this is perhaps an indicator of their inherent business robustness.

REACHING FOR FUNDS

To counter my lack of bullishness and in order to make the portfolio more growth focussed and global and diverse in reach, I have recently invested in a few selected funds; Alliance Trust (ATST), Baillie Gifford Global Alpha Growth Fund (B61DJ02), Fidelity European Trust (FEV), Janus Henderson European Smaller Companies (0747608) and Schroder Oriental Income Fund (B5BJ7M1).

This has worked out quite well so far. However, distinguishing between the multitude of funds available was a longer and more challenging experience than identifying shares to buy. Therefore, I have invested in large size funds rather than more specialised boutique funds thus far.

Investments in less familiar FTSE 250 companies continue to work well. Take, Synthomer (SYNT) a chemical company which supplies aqueous polymers to various markets worldwide. The company appears to have an important function and its share price has been both stable and increasing. Drax (DRX), Hill & Smith (HILS) and IMI (IMI) have similar distinctive attributes and are companies that I may invest in further, most likely when I can sell off some of my struggling FTSE 100 shares.

IMI has been subject to recent takeover activity with its share price for the present continuing to rise.

A QUESTION OF ETHICS

Another matter to consider has been business ethics and particularly the effects environmental, social, and corporate governance (ESG) factors might have on sustainability and societal impact as well as the future financial performance of companies.

This is something of a mares’ nest, for while it is possible to review company statements, it is trickier to define the evaluation criteria you might use to scrutinise business practice when tracking any concerns, you might have e.g., employees’ welfare and conditions of service.

At a more primary and perhaps naïve level, you can at least make judgements about whether companies are involved in business areas you support. This might involve ascertaining exactly what companies’ own and do. It took me, for example, far longer than ideal to discover that my shareholding in Associated British Foods (ABF) included the High Street value clothing and accessories shop called Primark as well as Allinson bread and Twinings tea.

I am unlikely to ever invest in tobacco and gambling although I have shares in the drinks company Diageo (DGE). You could drive a coach and horses through this level of reasoning (i.e., smoking and gambling are problematic, but drinking is ok in moderation), yet it is an attempt nevertheless to review ethics-related concerns in some form of plausible way.

STEADY PROGRESS

So, overall, the last quarter has been reasonably subdued but steady in terms of progress. Every so often I am hit by broadsides such as when the Federal Reserve Bank in the US were mulling over whether to raise interest rates. Such macro developments are not entirely easy to forecast, and it is a dispiriting to watch your entire portfolio plunge in value. A similarly unfortunate day was ‘Freedom Day’ in England on 19 July.

At these times, it does appear as if you are trying to nurse an ailing car to the nearest garage as you review whether some selective share buying and selling might help matters. However, over time the markets tend to recover and so an investment rather than savings-based approach to retirement planning continues to prove both interesting and rewarding.

WOULD YOU LIKE TO FEATURE AS A CASE STUDY
IN SHARES?

We are looking for individuals or couples who can discuss their experience with investing and some details about their portfolios.

Anyone interested should email editorial@sharesmagazine.co.uk with ‘case study’ in the subject line.

DISCLAIMER: Please note, we do not provide financial advice in case study articles and we are unable to comment on the suitability of the subject’s investments. Individuals who are unsure about the suitability of investments should consult a suitably qualified financial adviser. Past performance is not a guide to future performance and some investments need to be held for the long term. Tax treatment depends on your individual circumstances and rules may change. ISA and pension rules apply.

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