How I invest: a mix of shares, investment trusts and a growth fund help me save for my family’s future

Gordon uses his scrutiny of a company’s management, leadership and strategy to make his investment choices

Gordon retired in his late 50s after a successful career in media planning including a period working for The Sunday Times. He is a big fan of investing and calls his SIPP (self-invested personal pension) ‘my family’s future’.

Dividing his time between a rented flat in Mexico City and a house in the UK, Gordon’s investment journey stems from his interest in the general management of companies, their growth and productivity.

‘I try to identify exceptional managers and boards which tend to speak out against the rest. I enjoy research and analysis; however, I’m not obsessed. I mostly own shares, one growth fund and several investment trusts. I don’t buy ETFs.

‘I have a balance of short, medium and longterm growth investments. I don’t do bonds.’

Interested In Green Energy

Gordon is positive about the long-term future of alternative green energy source, hydrogen. He says: ‘As a kid I read a piece in a national newspaper about experiments in developing hydrides as an aviation fuel. I think hydrogen makes the best sense long term particularly in the areas of aviation, shipping, and long-haul trucking. I see an amazing future for alternative combustible fuels, especially hydrogen.

‘I have my eye on US-based electrical equipment manufacturing company Plug Power (PLUG:NASDAQ) as the company is ahead in hydrogen fuel for light industrial vehicles. I also have a watch-list of US infrastructure companies, but most are too expensive for me at present.’

ITM Power (ITM:AIM) – a hydrogen economy company – has also caught Gordon’s eye as the company has a new CEO. ‘I believe it has a solid long-term future making economic green hydrogen. I am convinced about the long-term future of green hydrogen as a significant part of the UK’s energy integrity and security.’

Other sectors of interest to the investor include insurance where he has been impressed by Amanda Blanc, chief executive of Aviva (AV.) ‘Blanc has a keep it simple portfolio strategy, as well as personal honesty.’

The defence sector has also caught his eye as he believes NATO will continue to increase spending in the long-term. Gordon invested in defence, security and aerospace company BAE Systems

(BA.) two years before the Ukraine war and has also invested in defence and nuclear engineering services company Babcock International (BAB).

Staying Informed

Gordon invests every month and checks the value of his investments every week. He watches Bloomberg every morning to stay on top of the latest financial news but he doesn’t belong to any investment clubs.

‘I prefer my own counsel. I don’t regret not having informed friends to discuss stuff, but I gather a lot of information from reading. I pick bits and pieces from the financial press, and I try and corroborate this with other sources.

‘I try to look to change and to the future –the world, Europe, Asia. But I’m increasingly pessimistic about the UK and China. I make use of analyst notes, but some differ wildly in the forecasts. I don’t spend too much time analysing company accounts or financial statements.’

Gordon says he avoids Latin America ‘because I know the levels of corruption are endemic’. He adds: ‘It seems to me that the emerging economies I looked at four to five decades ago are still emerging. I’ve never been tempted by investing in Russia and Eastern Europe. India has clearly been on the rise for some time, but I don’t trust its politics. Brexit was an enormous mistake. There’s more opportunity in the US, Europe, and the Association of South-East Asian Nations.’

Putting Money Into Investment Trusts

Gordon’s portfolio features a range of investment trusts including JPMorgan Global Growth and Income (JGGI), Murray International (MYI), JPMorgan Claverhouse (JCH), City of London Investment Trust (CTY) and Scottish Mortgage (SMT)

‘I still place a lot of faith in their structures and managements who do all the heavy lifting in complex sectors and geographies and who are mainly, atypically in the finance world, decent folk.

‘Baillie Gifford’s strategy for Scottish Mortgage Investment Trust is brave, which is why I bought this long-term growth stock. Only disruptors can join the portfolio. I admired Clayton Christensen, the (now deceased) Harvard professor who created the concept of industrial disruption. Baillie Gifford, I believe, follows this principle even if unwittingly.

‘However, I don’t agree with the view that Tesla (TSLA) and the likes of Tencent (0700:HKG) justify such a large individual attention in Scottish Mortgage’s portfolio. There are new disruptors appearing.’

Turnaround Fan

Gordon invests in Rolls-Royce (RR), the aircraft engine specialist whose share price has doubled over the past six months. He says he has been impressed by the company’s research and development capabilities and likes new chief executive Tufan Erginbilgic, albeit recognising that former boss Warren East planted the seeds of the company’s turnaround plan.

He has put money into telecoms companies BT (BT.A) and Vodafone (VOD) as regular investments but ‘on not much research’. He bought Vodafone when it sold a large stake in US network Verizon Wireless.

Other shares passing muster with Gordon can be found in the financial sector. Lloyds (LLOY) is one of his legacy investments bought long before the global financial crisis of 2008 which triggered a big sell-off in banking shares.

He invested in insurance group Prudential (PRU) because of management change, international strategy – focusing on Asia and Africa – and divestments. ‘It’s going to be too exposed to China, Hong Kong is not independent anymore, so I’ll sell if my investment appreciates by 30%.’

From the construction sector he holds housebuilders Taylor Wimpey (TW.) and Vistry (VTY). The former he says has a large land portfolio and the latter has a hedge in its social housing commitments.

Gordon owns shares in oil and gas exploration company Tullow Oil (TLW). He says: ‘I’m hoping it’s a takeover target or one day it will find water or gold instead of low-grade oil in Africa or Guyana. I took a risk on sensible governments in Africa not embracing Chinese or Russian investments.’

He also invests in energy giant Shell (SHEL) as he has faith in the people running the company. ‘I believe its management is realistic about the need to continue with fossil fuel development in the medium-term. It also has a parallel strategy of investing in future technology. I’ll probably take some profit when this phase’s present rate of increase slows.’

Future Investment Plans

Gordon says he has a long-term strategy for decades; however, he has recently become ‘more focused’ after converting one of his pensions into a SIPP. By running his own pension scheme, a SIPP provides much greater investment choice than can be found with a typical pension found in the workplace or offered by one of the large life insurance companies.

‘Over the past year, I’ve shifted the balance more to identifying long-term growth – such as Vietnam rather than China. A couple of years ago my portfolio was skewed towards growth with medium risk and with a balance of UK, European and global.’

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.

By Sabuhi Gard Investment Writer