CASE STUDY: The Funds I'm Backing to Get on The Property Ladder

2 December 2021 - Like many people her age, Jess Maybury, 29, is hoping her investments will enable her buy her first home. Jess works as a bio-medical scientist working in the university sector, where she is on a vaccination analysis team for COVID.

Important though this work is, it does not offer an easy route to home ownership. She spent several years studying for a PhD, during which time she had very little spare cash for savings. However, since finishing her degree she has been investing on a regular basis.

She says: “I live in Surrey with my boyfriend and would ideally like to buy something in the area, even if it’s just a one-bedroom flat.

“I started investing five years ago when I finished my PhD and got my first full time job. I try and be as frugal as possible, and act like I am still a student, to help boost my savings.”

Jess has opted for a stocks and shares ISA, which is invested with Chelsea Financial Services and split between a number of stock market based funds.

Family Advice and Research

Jess says: “When it comes to picking funds I’ve taken some advice from my parents and my boyfriend’s family. But I have also done my own research. Chelsea Financial Services gives a lot of information in their Viewpoint magazine about different investment topics that I can independently research.”

Jess is also keen to invest ethically and sustainably. “It is very important to me and my partner that we are as responsible as possible when selecting where to invest.

“Fees are also important too, and we try to keep costs to a minimum. This is one of the reasons I’ve chosen an execution-only provider. I don’t think I need to also be paying for investment advice at this stage.”

Within this ISA, Jess splits her money between a number of funds. Her three main holdings are currently Baillie Gifford American, Ninety One Global Environment, and VT Chelsea Managed Balanced — a fund-of-funds portfolio.

She says: “I do have a few smaller holdings but these funds make up the majority of my ISA. I have been really pleased with the performance of these funds. It has been particularly amazing given everything that has been going on with the economy in the wake of the Covid pandemic.”

Highly Rated Funds

Baillie Gifford American is a fund that focuses primarily on larger cap US stocks. It has delivered strong returns in recent years – with annualised returns of 33.18% over the past five years.

Although this is partly on the back of strong growth in US markets, it is noticeable that this fund has comfortably outperformed its benchmark, and as a result has a 5-star rating from Morningstar. It also has a Morningstar Quantitative Rating (MQR) of Gold for its cheapest share class (B).

Ninety One Global Environment fund has a MQR of Bronze for its cheaper share class. Analysts say the fund is run by an experienced management team who are backed by a strong parent. Although it is a relatively new fund, it has demonstrated positive initial performance, and this is combined with a competitive fee structure.

VT Chelsea Managed Balanced Growth is a fund of funds, which invests in a mix of equity and fixed interest options. Again it is a relatively new investment option having launched just three years ago, but over this period it has delivered annualised returns of 11.21% according to Morningstar data. It has an MQR of Neutral. This is a global portfolio, with exposure to US, European, Japanese and emerging Asian markets. Currently the top fund holdings in the portfolio include Chrysalis Investment (CHRY), T. Rowe Price Global Focused Growth, Taylor Maritime Investment (TMI) and Fundsmith Equity.

Sticking With Funds

Jess says: “Over the past five years I’ve been happy with the growth I’ve seen on my investment. I know you can’t guarantee growth with equities, but I have been lucky with my timing. Also investing monthly has helped and enabled me to spread risk and and even out fluctuations in the stock market.

“When I first started investing I did buy a few penny shares but they did not perform as well. I lost about £1,000 which was a lot to me at the time - and it still hurts a bit. But I guess you have to make a few mistakes. I wouldn’t want to invest into those sort of things now and prefer sticking with more diversified funds.

“But I have been fortunate in other ways. The pandemic has meant we haven’t been able to go on holidays and money I would usually spend on them and going to gigs and socialising I’ve put into my. Every month we getting that bit closer to having enough to put down a 10% deposit on our first home.”

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 02/12/2021