Investor Clinic: An ex-pat with a young family and a lump sum to invest


#1

Originally published at: http://whichinvestmenttrust.com/investor-clinic-an-ex-pat-with-a-young-family-and-a-lump-sum-to-invest/

A Singapore based British ex-pat is looking for suggestions on where to invest a lump sum in the UK to provide for his family. Name: J from Singapore Age range: 36-50 How long can you keep this money invested for? 10 years Do you have a separate pot of ready cash for a ‘rainy day’?…


#2

Hi, you have a good range of ITs, however it is always helpful to evaluate the discounts for the entry point. At present I am debating between investing on behalf of one of my son’s ISAs into Scottish Mortgage or Monks. At time of writing Monks has a 10% discount to a almost 2% premium for Scottish Mortgage with some shared companies in their portfolios…so I am leaning towards Monks.
Personally I prefer a mix between tracker funds/ETFs for large markets with ITs hopefully providing some alpha in small caps, emerging markets, infrastructure, pharma etc.


#3

Hi J from Singapore,

You have a good range of trusts there, here’s my thoughts on it.

It sounds like you might be new to investment trusts, in which case, one advantage they have over funds and ETFs that isn’t talked about enough in my opinion is they have an independent Board who are charged with looking after shareholders interests. They’re often not perfect, and sometimes could do better but they are a point of difference that should give you some peace of mind if you’re investing from so far away.

Of the trusts you suggest here are the one’s I would go for:

Finsbury Growth & Income Trust - I’d definitely go for this. Holds a concentrated portfolio of consumer stocks. Great long term performer
Scottish Mortgage Investment Trust - This gives you a lot of exposure to tech stocks and is again a great long term performer
The City of London Investment Trust - Safe, conservative trust with really low fees. I think of it as a better alternative to a tracker
Edinburgh Investment Trust
Foreign & Colonial Investment Trust
Witan Investment Trust - Low cost multi manager that’s been doing well since Andrew Bell became manager
Henderson European Focus Trust - Either of the Henderson European trusts would do for me. Europe has a lot of great companies and it’s recovering well too
The Biotech Growth Trust - This will be volatile, but it’ll also deliver you fantastic returns if you can hold it through the volatility. If not go for Worldwide Healthcare, less volatility though less returns too
Baillie Gifford Shin Nippon - what I love about this fund is it performed strongly even when the Japanese market wasn’t doing so well

To get a little bit of protection in your portfolio in case of an inflation led crash I would also consider a holding in Ruffer investment company. They are positioned for a crash, in that they hold gold, index linked bonds, and short dated bonds, Japanese stocks too. If there is a crash this trust will do well, and if not, it won’t lose you money, it’s an absolute return fund.

I also like the Monks trust @Bellabeck suggested, though it is a different beast from Scottish Mortgage. They explain it pretty well here: http://whichinvestmenttrust.com/buy-monks-get-the-best-of-baillie-gifford/

It would be helpful if you could post your forum name here J from Singapore because I couldn’t find it.


#4

You’ve had good advice from @jonno and @Bellabeck. One thing I would add regarding volatility is that, it isn’t important if you are a long term investor, it only becomes an issue if and when you want to sell.

What is attractive about the healthcare sector and the Biotech firms is we’re all getting bloody older (unfortunately), and spending on this sector is only going to increase as a result. So I would take some comfort in knowing that yeah, there will be volatility in the share price of Biotech Growth trust but we can all see where the long term destination is, much greater demand for the services and solutions Biotech companies creates.

I would also really go ahead and put something like 10% of your money in one of the absolute return trusts like Ruffer or even Capital Gearing trust. They are very unlikely to lose you money, and in a bull market you can expect them to lag behind a little, but in a bear market, they’ll really, really boost your portfolio returns.

Good luck J for Singapore whatever you choose mate.