Investment companies can be a helpful tool for investors at all stages
But savers have different needs depending at their stage of life and choosing among the 300 companies can require an expert helping hand.
Trade body the Association of Investment Companies (AIC) has rounded up some recommendations from financial advisers for millennials, middle years and the retired.
Millennials – just starting out
Dennis Hall, chief executive of Chartered Financial Planner at Yellowtail Financial Planning: “Investors in their twenties and early thirties have time on their side and if investing for the long term they can afford to take a few knocks along the way to get a better outcome.
“The secret is to buy well and hold. I’m torn between investing into a high conviction investment company like Lindsell Train, or into something more diversified like Scottish Mortgage – personally I hold both and maybe that’s the answer.”
Tim Cockerill, investment director at Rowan Dartington: “Downing Strategic Micro Cap is a small specialist investment company which runs a very concentrated portfolio of micro-cap companies in which the manager takes large positions, and works closely with the businesses to maximise their success.”
“Due to the less liquid nature of these companies, Downing Strategic Micro Cap’s performance profile is likely to be quite different when compared with mainstream UK smaller company funds – but the reason for investing is that these small businesses have the potential to grow significantly and the manager Judith Mackenzie is very experienced in this space.
“This is definitely one for the long term, so ideal for patient millennials.”
Jim Harrison, director at Master Adviser: “I’d consider two investment companies here, one an income company, the other a growth, both with young managers. Age or youth doesn’t define the manager, but I look for long-term continuity, and with my recommendations there is potential for the managers to be at the helm for a long time.
Millennials can think long-term
Age or youth doesn’t define the manager, but I look for long-term continuity, and with my recommendations there is potential for the managers to be at the helm for a long time.
“The growth trust is Invesco Perpetual’s Keystone, recently handed over by Mark Barnett to James Goldstone. James’s style is markedly different to Mark’s. For one he is as bullish as I am on financials, particularly banks, and has adjusted the portfolio accordingly.
“Performance since he took over has outperformed the benchmark FTSE All-Share. It’s not past performance that drives this selection, it’s the presence of a young (he was four years below me at school) manager at the head of an equity growth investment company which you can buy at a 10% discount; ideal for a long-term investment. The 3.2% yield is a bonus.
“Lowland also benefits from having a young co-manager, Laura Foll, working alongside James Henderson.
“Laura was appointed co-manager in 2016, and this is definitely a partnership of equals; she shares James’s ‘in early, out early’ philosophy and is the natural choice to manage the fund when James retires.
Some funds have substantial reserves
“Since her appointment, the fund has outperformed the FTSE All-Share.
“Lowland will take stock specific risks by casting its net down the market cap spectrum, but for young investors with a long investment timescale, this is a risk most can afford to take.”
Neil Mumford, chartered financial planner at Milestone Wealth Management Limited: “A perfect investment company for growth, Witan has a unique approach for an investment company by using a global multi-manager strategy and it has been rewarded by excellent returns.
“This is an ideal investment for millennials saving on a monthly basis, benefitting from pound-cost averaging and the re-investment of a rising dividend which has increased in each of the last 43 years. We have recommended this investment company for many clients’ children and have been very delighted by the returns.”
Middle years – going the distance
Dennis Hall, chief executive and chartered financial planner at Yellowtail Financial Planning: “Investors in their forties and early fifties are beginning to see retirement on the horizon. Their willingness to take knocks begins to reduce as the emphasis starts to tilt from all out growth towards the preservation of what they’ve gained.
“Arguably the portfolio will run for another 40 or more years, so my millennial recommendations would…