CASE STUDY: Global Funds Boost My Retirement

16 June 2021 - At 75 years of age, Katherine Blackwood is able to enjoy some of the gains she has made from investing over the past quarter of a century or so.  

Katherine, who lives with her husband in Herefordshire, has largely invested in ISAs over this period.

“My husband and I have had a number of investment goals: to provide an income for our retirement and to help our grandchildren with school and university fees.” But having a reasonable investment portfolio means she is able to use this money when she needs it.

“In normal times we enjoyed holidays and eating out, so would dip into our savings when we needed to. It is lovely to have the ability to do this as often as we desire and the Isa accounts are really easy to take money from, and it is all tax-free of course. I am also partial to a shopping spree in London with my girlfriends!”

Katherine started to invest in ISAs after the couple had cleared their mortgage. She also used some of the lump sum from her pension to invest in these plans.

She says: “My husband is a retired accountant and quite prudent with the decisions we make as a couple. But I don’t mind taking a bit more risk with my investments, because it tends to pay off in the long run, and I am not too concerned with short term fluctuations.”

Katherine manages her ISAs through Chelsea Financial Services and this has enabled her to invest in a broad range of global funds. She says: “The fees are important, but mostly I like to see how risky each fund is.”

Asia Focused Funds

Currently, Katherine’s money is invested across a range of funds that invest in different geographical regions and sectors. Her holdings currently include Fidelity Asia Pacific OpportunitiesJupiter IndiaLegg Mason Japan and Marlborough UK Micro Cap.

Katherine agrees that these many of these are very growth-oriented funds, and might not be the typical lower-risk investments people would associate with a retired investor. But she says she is happy with this risk profile and is confident these funds will continue to deliver good returns over the longer term.

The Fidelity Asia Pacific Opportunities fund has a Morningstar Analyst Rating of Bronze, from Morningstar, who say it benefits from a “solid management team and a concentrated contrarian-orientated approach”.

Jupiter India is another fund with a Bronze Rating. The fund has delivered steady long-term returns, providing annualised returns of 6.19% over the past 10 years, according to Morningstar data.

Legg Mason Japan has outperformed its benchmark in recent years, which has earned it a 5-star rating. However the fund has a Neutral Rating, meaning that Morningstar analysts are less confident about whether this outperformance will continue going forward. The fund though has delivered strong returns for investors like Katherine. According to Morningstar data the fund has delivered annualised returns 22.69% over the past decade.

Katherine also had some money invested in China, but has sold of these funds recently as she didn’t like the political regime there.

UK Smaller Companies

While these are all overseas funds Katherine also invests in the UK market. The Marlborough UK Micro Cap fund, she says is a way for her to get exposure to far smaller companies. She says these are, by their nature, more risky, with some likely to go bust, or fail to grow. But as she points some will develop new technologies, products or services and can grow extremely rapidly, delivering excellent returns for investors. However, she says investing via a diversified collective fund helps her invest in a wider number of these micro-cap companies.

This fund has a Quantitative Rating of Neutral from Morningstar, which points out that it does have relatively high fees. However it is another fund that has comfortably outperformed its benchmark, delivering annualised returns of 15.99% over the past 10 years.

Elsewhere, Katherine and her husband also hold a number of Premium Bonds, but she says they rarely pay out.

She adds: “I am getting a bit fed up with them but interest rates are so low there's little point in moving the money into the bank. 

“I also have two VCTs and get dividends from them, which is great. I used to occasionally dabble in individual shares, but never with large amounts. This is more of a ‘fun’ thing to do but I don’t have the time any more and had limited success.”

She adds that having a reasonable Isa portfolio, on top of the couple’s pensions has enabled her and her husband to enjoy a comfortable retirement. She says: “I have now started to give money away to my children, because they need it. It seems silly for me to have it sat in the bank.” 

Originally reported by Emma Simon at MorningStar. Read the article here

Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views expressed are those of the author and investor do not constitute financial advice.

Published on 17/06/2021