FE TRUSTNET
60%
50%
40%
30%
20%
10%
0%
-10%
Lansdown at IPO
Integrafin (40.04%)
invested in Hargreaves
an instant hit. From a tiny fund-
marketing business started in one of
the founders’ bedrooms in the 1980s,
it is now valued at £10.71bn. If you’d
invested £10,000 when it floated,
you’d now have £152,351.
The two that have floated in 2018,
Integrafin (Transact) and Nucleus,
have got off to mixed starts. Integrafin
is up 40 per cent since March, while
Nucleus is down 26.76 per cent since
July. AJ Bell, up next, is the biggest
platform after Hargreaves to float.
There is no doubt this market is
fast-growing and the scale players
will do well. The question is, will AJ
Bell make it to the heights that makes
Hargreaves so valuable?
PERFORMANCE OF STOCK SINCE IPO
Value now of £10,000
Investment platform IPOs
Which brings me on to the subject of
investing in platforms. The original
“Daddy” of platforms, Hargreaves
Lansdown, floated in 2007 and was
£152,351
So, what’s the answer?
Whether an investment is made at
IPO or afterwards, the same rules
apply. Do your research and analyse
whether you believe the prospects of
the company or trust are sound.
I still believe paying someone to
run a well-diversified and actively
managed portfolio of shares in a fund
seems to have the best outcome,
given my own experience, but I might
change my tune over the longer term.
which are looking to invest in global
equities, Japan and so on. Then there
are the REITs, the property cousins of
investment trusts, which tend to invest
in building property, such as student
accommodation, commercial property
or social housing. These represent
interesting opportunities to get in at
the ground floor, where surely the only
way is up?
Not quite. I recently put a slug of
my own portfolio into two trust IPOs,
Neil Woodford’s Patient Capital Trust
and Terry Smith’s FEET (Fundsmith
Emerging Equities Trust).
While FEET is up around 5 per
cent since launch in June 2014 (not
terribly impressive given the stellar
performance of Fundsmith Equity),
Woodford is testing my patience with
losses of around 20 per cent.
In Woodford’s defence, he has left
shareholders under no illusion he is
investing for the long term in early stage
businesses which, if they succeed, will
do exceptionally well. This means we
will just have to put up with some losses
on the ones that will inevitably fail.
So, I’m hanging tight, but I wish that
I had put my money in now rather
than at the beginning, such is the
power of hindsight.
Then there are the companies looking
to grow to the next level. At present,
Funding Circle is lining up an IPO and
there are rumours of offerings from
Compare The Market, 02, Jaguar Land
Rover and Sky Betting & Gaming.
The question is, will any of these
firms offer their shares to private
investors through an IPO and will
their value rise once they float?
Saga was one company I had high
hopes for when I invested at its IPO back
in 2014 and at one point it was flying.
Now I’m nursing a 31 per cent loss.
In fact, all of my direct share
investments, including investment
trusts, are looking a bit sorry for
themselves, down 7 per cent on
average, compared with my fund
portfolio, up nearly 37 per cent.
I’m still of the view that
paying someone to run
a well-diversified and
actively managed portfolio
of shares in a fund seems
to have the best outcome
for most investors
[ PLATFORMS & PENSIONS ]
46 / 47
In the back
Source: FE Analytics
trustnet.com