An email popped into my inbox last week telling me the thing no investor wants to hear.
One of the investments I’d sold had actually done rather well since I dumped it.
Well, that was bound to happen, wasn’t it? When you sell a stack of investments, you can’t get them all right.
What you try to do is bring a better balance to your portfolio and increase your chances of improved returns over the longer term.
Hard to take: It is never easy to learn and investment you dumped has since soared
Threadneedle UK Equity Alpha Income is the fund in question. So congratulations if you hold it.
At the end of June 2014, I invested at a cost of 130.71p per unit. I sold on February 22 for 133.68p.
In the six months since then someone must have put a rocket under it, because the price has risen to 147.45p. That 10.3 per cent increase will have turned a £10,000 investment into £11,030.
The financial adviser who had taken a brief break from fly fishing to send the email promised his intention wasn’t to gloat — he merely thought I would be interested.
And I was. His email made me realise it was high time I took another thorough look at the changes I had made to the Hazells’ pensions and Isas — had they actually left me better off after all?
At the beginning of this year, I had looked at our investments and thrown up my arms in despair. They needed to deliver better returns to keep up with Mrs Hazell’s never-ending round of home improvements.
While it wasn’t all bad news, my portfolio was showing clear signs of neglect.
My overhaul started towards the end of February, followed by some more juggling in June.
I had three objectives — to cut the number of funds, produce a better balance of investments and, most of all, to improve my returns.
So what happened to the other funds I sold in the initial cull? Invesco Perpetual High Income has risen by 9.2 per cent, so would have turned £10,000 into £10,920, while Quilter Global Best Ideas has risen by 8.2 per cent.
Those are the best performers, other than the Threadneedle fund. Others leave me with no regrets whatsoever.
Woodford Equity Income has crawled up 3.8 per cent, Man GLG Balanced Fund is up 2 per cent, Troy Trojan is up 1.9 per cent, FP Argonaut European Alpha has fallen by 2.4 per cent and Jupiter Absolute Return is down 0.7 per cent.
Remember, investment is a long-term game, and if every fund was zooming ahead I would definitely be questioning whether my portfolio was balanced sensibly
I’m most relieved to be rid of Templeton Emerging Markets, which is down by 8.7 per cent, and Jupiter New Europe, down 11.2 per cent — this latter would have taken £10,000 and reduced it to £8,880.
Of course, the key thing is whether the funds I have replaced them with have done any better.
Let’s start with a benchmark. I bought more units of a cheap tracker fund, Vanguard FTSE UK All Share, on February 9, which shadows the UK stock market.
This has increased by 9.4 per cent —every £1,000 is now worth £1,094.So this computer-run drone fund has beaten all of the ‘expert-run’ funds I sold, bar one.
This in itself shows the value of trackers as core holdings, especially if you do not have the time, expertise or inclination to manage your own money.
My biggest success is Scottish Mortgage, for which I paid £4.39 per share on February 13. It is now worth £5.62. So that’s a gain of around 28 per cent.
Scottish Mortgage looks to invest in growing companies and is currently heavily weighted towards technology/retail companies such as Amazon, biotech firm Illumina, Alibaba (the Chinese equivalent of Amazon) and Tencent (another Chinese tech company).
Part of my reorganising has been to boost my holdings in global growth companies.
Lindsell Train Global Equity has also proved a winner, growing by around 18 per cent since I bought it on February 22. Fundsmith Equity — another flexible worldwide investment fund — has also increased by 15 per cent since I added to my holding at the end of February.
Jupiter European has advanced nearly 19 per cent in just under six months since my purchase on March 13.
However, other funds have shown more modest gains. Since I added to my holding of FP Crux European Special Situations in February, it has increased by a mere 4 per cent. But over the longer-term, manager Richard Pease has provided fantastic returns.
When I originally bought into an earlier version of this fund in mid-2012, I paid 114.02 per unit.
Now its price is 294p, so I’ve seen a 157 per cent return in little more than six years. To put this into pounds and pence, every £1,000 invested has grown to £2,570.This is definitely a fund I will be sticking with.
Remember, investment is a long-term game, and if every fund was zooming ahead I would definitely be questioning whether my portfolio was balanced sensibly. So, overall, I feel that I am on the right track.
It’s far too soon to make judgments on my summer juggling, but I’ve recorded the data and will let you know about my successes and clangers in a few months’ time.