PENSIONS
8
“THE US IS AN AREA
THAT IS DEAD TO ME
AS I CANNOT FIND
ANY DECENT ACTIVE
MANAGERS”
digit discount to net asset value,
whereas today it has moved to a
premium, so you do have to be more
opportunistic with trusts.”
For Robertson, investor
understanding is the key to using
closed-ended funds. He says for
those investors prepared to take the
time to learn how they work, over
long periods of time the returns they
can generate are very rewarding.
One area Dampier would avoid
would be sector-only funds, such
as financials, technology and
healthcare.
“The thing to remember is that
you will already have exposure
to most of these sectors in more
generalist funds, so you will
effectively be doubling up your
weighting to them,” he said. In its
Wealth 150 list of recommended
funds, Hargreaves Lansdown now
carries only one sector-only fund:
BlackRock Gold & General.
Dampier says: “Gold is a separate
case and we have stuck with it
because manager Evy Hambro has
added value. However, in general
with sector-only funds, you are
paying a lot more for them while
you are not getting much added
value, but a lot more volatility.
This is because if the sector goes
badly, you have nowhere to go. For
instance, biotech got caught up in
the TMT crash and did badly for six
or seven years, only climbing back
in the last three or four years.”
If you are inclined to go sectoronly, Dampier says a better strategy
would be to invest in the sectors
that are dead on their feet, yet
in reality he says 99 per cent of
investors will buy and sell at the
wrong time. “What you are left with
is a sex and violence fund where the
end client gets all the violence and
none of the sex.”
The last remaining asset to
consider when building an
accumulation portfolio is good
old boring cash, not for its return
prospects, but for its ability to allow
you to quickly take opportunities
if and when they arise. Robertson
adds that lots of regular payments
into the pension are important,
with pound-cost averaging an
approach he says really works.
So to conclude, the key when
building an accumulation pot
over a 20-year-plus investment
horizon is to be brave, pick and
stick, and ignore all the noise. Next
up, stay away from bonds and
go for equities, but don’t ignore
income, don’t get bogged down by
geography and, finally, don’t try to
be too clever with diversification.
Simple really. Good luck!
PERFORMANCE OF SECTORS OVER 20YRS
800%
FTSE 350 Financial
Services TR in GB
(689.78%)
700%
600%
FTSE 350 Health Care
Equipment & Services
TR in GB (386.45%)
FTSE 350 Technology
Hardware & Equipment
TR in GB (19.51%)
500%
400%
300%
200%
100%
0%
Aug 13
Aug 11
Aug 09
Aug 07
Aug 05
Aug 03
Aug 01
Aug 99
Aug 97