Over My Shoulder . . .

Welcome back to the fabulous world of Whistler finance in this shiny new decade. I am minded to have a quick peep at the past and, given that I wrote my first piece for The Whistler in 1999, a little of what has happened since then. Those of you who have suffered this column for any length of time will know my penchant for investing little and often and spending time in the markets, rather than making an attempt at timing the market. So, what better than a quick look at the performance of one of my favourite investment vehicles – the Investment Trust (IT) – since the beginning of the century? Let’s take a look at some of the top-performing ITs of the century so far. While we should all know that the past is not necessarily a guide to the future, the New Year allows us a glance over the shoulder at the past and get, maybe, some insight to the future.

Without intending to sound smug, your humble correspondent holds, or has held, five out of the top twenty during the last 20 years (including the top two) although I have only held one for the entire period. The overall winner is TR Property, which has produced a magnificent total return of 1,890% net of tax. Great kudos to the management team! Second, was Worldwide Healthcare, with a splendid total return of 1,550%. Third, came Scottish Oriental Smaller Companies from First State Investments, producing a total return of 1,535%. This might be a bargain buy as shares are currently priced at some 10% below their net asset value. Fourth, is Aberdeen Standard Asia Focus which has produced a total return of 1,502%. Steered by legendary fund manager Hugh Young, this might be another bargain as it currently trades at around a 12% discount. Fifth is HgCapital, a private equity trust, with 1,456%. The remainder of the top 20 are: Aberdeen New Thai; BMO Private Equity; Rights & Issues; Invesco Perpetual UK Smaller Companies; Gresham House Strategic; Blackrock Throgmorton; Fidelity Special Values; Acorn Income; BlackRock Smaller Companies; Biotech Growth; Genesis Emerging Markets; Aberforth Smaller Companies; Mercantile; JPMorgan US Smaller Companies; and Aberdeen New Dawn.

To qualify things, two factors have been overriding in my (qualified) success: firstly, time was on my side – I consider any investment to be for an absolute minimum of 10 years. Secondly, I am a contrarian. I have mentioned in previous articles my great respect for Sir John Templeton, who described himself as “an accommodating investor” and famously accommodated folk by buying their shares when almost everyone was panic-selling, and selling his shares when everyone wanted to buy. It also helps having been in Financial Services since 1986. Over the years I have used monthly saving plans for both Investment and Unit Trusts, but never more than £100 per month and only one lump sum of more than £500 (the only time I invested more than £500 it was a new launch and, whilst it made nearly 50% in the first 9 months, my buy and hold mentality eventually lost me 80% of my capital by 2002!). I was never brave enough to go all-in no matter how convinced I was about a particular investment, and, mostly, I’ve been lucky.

I look at every set-back as a potential buying opportunity, and every loss as a lesson. It is worth remembering that shortly after the turn of the century, the dot com bubble burst and global stock markets slumped. This was followed by the terrorist attacks of 11 September 2001, the Enron bankruptcy scandal, the market downturns of 2002, and the Iraq war. The financial crisis of 2007/8 also tested one’s resolve.

Enough for now. In the next issue, I’ll be somewhat less retrospective, and see if we can get a glimpse or two of the future! Until then, Happy New Year!

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