IN ASSOCIATION WITH

CATCHING THE FLIGHT COVID-19: OUTLOOK FOR EPIC FOR TO QUALITY IN 2020 INCOME 3 DIY Magazine | Apr 2020 MAGAZINE INBOX YOUR TO MAKE SURE DON’T YOU MISS AN ISSUE; CLICK HERE RECEIVE TO DIY INVESTOR 39_ EVERY BEAR MARKET OWN HAS ITS DISTINGUISHING – THIS TIME FEATURES AND SPEEDTHE CAUSE OF THE FALLS ARE, THE UNIQUE – FAR, SO FEATURES ROBERTSON DALE WRITES 40_ BASICS: INVESTING 101 INVESTING INCOME 42_ PERSPECTIVES:GLOBAL PAST THE FIRST INFLECTION POINT IN ESTIMATES EARNINGS CONSENSUS 34_ REVOLUTION THE OF CHILDREN 24_ ARE BONDS? INVESTING BASICS: WHAT 26_ DIY INVESTING: TO HOW EQUITY PORTFOLIO AN CONSTRUCT 28_ CONSIGN ‘BOOM AND LET’S FINALLY BOOKS THEBUST’ HISTORY TO 32_ INVESTOR’S POWERFUL MOST ‘AN WEAPON IS PATIENCE’* INVESTOR THOUGHTS OF SALTYDOG PART 2 20_ TIGHT ON HOLDING

04_ SEEKINGIN CERTAINTY OF UNKNOWN THE FACE UNKNOWNS

INSIDE 06_ QUALITY THEFLIGHT TO CATCHING 10_ SEE‘YOU WHO IS SWIMMING NAKED WHEN THE GOES TIDE OUT’* THOUGHTS 1 PART INVESTOR OF SALTYDOG 12_ DIVIDENDS FOR OUTLOOK COVID-19: IN 2020 14_ INCOME FOR EPIC 16_ FINANCIAL ESG: SUSTAINABLE RETURNS GROWTH -TERM FOR 18_ IS GOING THE ECONOMY HOW BOUNCETO BACK?

[email protected] 07881 502 705 [email protected] 07973 48307973 687 Head of Sales & Marketing GRAEME FOSTER GRAEME Publisher STEVE HAYSOM MEET THE TEAM it does not offer advice. DIY Investor Magazine delivers Magazine delivers Investor DIY information, and education PUBLISHING

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2 DIY Investor Magazine Magazine Investor DIY | Oct 2019 Oct | DIY Investor Magazine | Apr 2020 4 gamut of brokers and wealth and investment managers This is atrend that has been witnessed across the whole February, and 75% higher year year. on here More better than 2019, trade volumes compared up 40% with March 2019; year to date, account openings are 129% account openings in the month of March up 221% versus investingDIY platform EQi before. never like that people are taking personal control of their finances of the positives to of out the come current crisis –the fact to respond and protect their families; that has led to one In such circumstances people feel generally powerless marketsor be trashed by greed and malpractice. behaviour; whether it is allowing avirus to jump species, at ahigh level there is often reckless and questionable At first glance, there may be few threads, common but and along the Global came Financial Crisis. by in days; just 23% two then the Dotcom Bubble burst, Monday and even blacker Tuesday, dropped the FTSE in amonth. we’ve But been here before –over Black gave 100 asset up prices 35% of its –the value FTSE went into lockdown, the reaction was the collapse of the economy groundWhen to ahalt overnight as we different modes of transmission. I now know something of had differing origins, and repeat but it’s it’ deuced difficult; the ghastly ills that fail who ‘those to learn from history are condemned to mayHe have borrowed it, but Sir Winston told us that Spanish Flu in 1918. have been taken that by succumbed and HIV the 50m to see how that is dwarfed thatat by 185,000 the 35m ‘pandemics’; with the death toll from COVID-19 currently That is until, in aslack moment, you quiz on Google Dr UNKNOWNS UNKNOWN OF CERTAINTYSEEKING FACE THE IN will never be again. the same have never been this bad and that this is it –El Gordo; things the fridge, it’s tempting to think totrying ignore the siren call of atSitting in home your pants, (formerly Selftrade) reported

Stay safe. money is, and that they are invested for the long term. of people will have of knowing the comfort where their when it all around comes again large avery number point At some we’ll be let free and markets will rebound; comes with beingcomes in control of their finances. can feel the sense of empowerment and liberation that to information, good we believe that many more people improvedWith levels of financial education and access Pond. the across pension provision adopt approach the hands-on we see accommodation of and healthcare the uncertainty and as people facing tuition fees, the high cost of self-reliance will necessarily replace state support Investor DIY arrived. support the storm with anest egg to tide them over until state wouldmost have been far better placed to weather self-employedThe have been hit particularly hard, but are taking to investing for the first time. control; adisproportionate number of younger people of their own seek to remove future and take uncertainty as people placed in aparlous through nofault CLICK HERE TO RECEIVE DIY INVESTOR INVESTOR DIY TO RECEIVE HERE CLICK MAKE SURE YOU DON’T MISS AN ISSUE; ISSUE; AN MISS YOU DON’T SURE MAKE MAGAZINE TO YOUR INBOX MAGAZINE was founded the on belief that financial the wider Equiniti Group. wider the the next generation of reached by EQi as we seek to engage and empower Funds) will be published in association with Investor Magazine (incorporating Focus on we are pleased to confirm that forthwith DIY In that, we have found akindred spirit, and 0007471_PremierMiton_Diverse_Income_Press Ad_Selected_V4.indd 1 Diversify across a broadrange of UKcompanies. The Diverse Income Trust plc.Aimingto deliver growing income for good and growing income opportunities.

Pence INCOME SINCE LAUNCH (PENCE PER SHARE) the Financial Conduct Authority. MFP19/505 RegisteredManager of thefund. address:6thFloorPaternoster House,65St Paul’sChurchyard, LondonEC4M8AB.Authorised and regulated by Financial Promotion issuedby PremierMiton Investors, atrading nameof Miton Trust ManagersLimited (registered no.4569694)theInvestment If you areunsure aboutthesuitabilityof aninvestment, pleasespeakto afinancial adviser. regarding thetrust, includingcharges,taxandspecific riskwarnings andwill form thebasisof any investment. We areunableto give financial advice. Report andAccounts andtheAlternative Investment FundManagers Directive (AIFMD) Disclosure Documentasthey contain importantinformation Investors shouldreadtheTrust’s productdocumentationbefore investing including,thePRIIPsKey Information Document(KID),thelatest Annual IMPORTANT INFORMATION the Trust. *The specialdividendhasnot yet beenpaidbuthasdeclaredby increased itsincome payable year-on-year by 8.8%. Since launch,The Diverse Income Trust plchas listed ortraded ontheUKstock market. to achieve thisby investing inthesharesof income andcapital growth over thelongterm. Itaims The ’s investment objective isto provide 0.0 4.0 2.0 0.5 3.0 4.5 2.5 3.5 1.0 1.5 2012 2.02 2013 2.1 2014 2.25 2015 0.5 2.4 2016 2.8 2017 0.4 3 0.23 2018 3.4 3.65 2019 0.16 Dividends Ordinary but notpaid declared Dividends Dividends Additional Special / premiermiton/diverseincome Find outmore Ratings arenotarecommendation. The Diverse Income Trust plc • • RISKS trust may therefore fluctuate andisnotguaranteed. distributions.Thefuture level of income paidby the Past distributionsof dividendsarenotaguideto not guaranteed andcan godown aswell asup. The value of sharesandtheincome fromthemare powered by CAPITAL AT RISK 27/11/2019 13:55 DIY Investor Magazine | Apr 2020 6 companies that will get stronger with each cycle. attractive over the long term and that there are strong itBut was clear that the market remains structurally iswhen the outlook challenging. because companies tend to be much more realistic Chennai and Mumbai -was particularly informative recent most My visit -which took us to Bangalore, Delhi, companies in India. however, both for the trust of and for types certain It’s atough environment that has its advantages, pain will produce long-term gains. have been disruptive, albeit we expect the -term months and the reforms put in place by the government There’s unlikely to be any real pick-up in the next 12 sectors. over concerns certain global uncertainties, slowing domestic growth and macroThe for outlook India remains challenging amid THATCOMPANIES WILL STRONGER’ GET STRONG ARE OVER THERE LONGAND THE TERM STRUCTURALLY‘THE MARKET REMAINS ATTRACTIVE • • • TO QUALITY CATCHING FLIGHT THE management track records. track management consumption themes and companies with good environment, benefiting from strong domestic trustThe is well positioned in the current positions. opportunities for companies to consolidate their Tough conditions and aflight to quality are creating positive. remains short-term , but the longer term outlook Global and domestic factors are contributing to

projects that has contributed to excess housing supply. sector to be in currently, with aglut of uncompleted Real estate example. offers agood This is difficult avery areSome also benefiting from aflight to quality. competitors. their consolidate their markets simply by doing better than advantage of the current challenging environment to We have been able to find companies able to take assets for cheaper. and cash flow and are finding opportunities to buy better and Godrej Properties, which have balance good sheets a flight to quality companies such as Prestige Group the competitionWith struggling to deliver, there has been projects. quality companies reputation with agood for completing high there is still strong demand for those real estate While many developers are unable to secure funding, thereBut is apositive theme emerging. Aberdeen New India Investment Trust Investment Director Fong, Kristy By WITH BALANCE SHEETS’ STRONG LOOK COMPANIES MANAGEMENT TEAMS FOR AND QUALITY THE TO ON OF FOCUS WILL CONTINUE ‘WE life insurance and we’ve been adding to real estate, but trustThe is overweight in consumer staples, banks and positions. This environment has for been good the trust in terms of willing able or to compete. corporate lending space, now that there are fewer banks It is also taking advantage of opportunities in the housing and real estate sector. isBank, benefiting from structural consolidation in the than industry growth. India’s biggest retail lender, HDFC in strong positions in retail continue to deliver higher A similar theme is developing in banking, where those ABERDEEN NEW INDIA INVESTMENT TRUST PLC TRUST INVESTMENT INDIA NEW ABERDEEN

navigating difficult cycles. navigating difficult balance sheets and that have track agood record of management teams for and companies look with strong Instead we will continue to focus the on quality of sectors. businesses to invest heavily in the telecoms and retail diversified of out its core petrochemicals and refinery sector as we don’t hold Reliance Industries, which has We have minimal exposure to the index-heavy energy All but one of our holdings are private sector enterprises. dependent the on corporate cycle. we’re still selective very in infrastructure and businesses

7 DIY Investor Magazine Magazine Investor DIY 2020 Apr | DIY Investor Magazine | Apr 2020 8 Select Aberdeen New IndiaSelect Investment Trust Plc Ord (ANII) 25p -GB0006048770 To buy this trust login to your EQi account Find more out at www.aberdeen-newindia.co.uk George Street, Edinburgh, Scotland, United Kingdom, 2LL. EH2 canbe obtainedThese free of charge from www.newthai-trust.co.uk by or writing Capital to SL LLP, Partners 1 professional advice before making any investment decision. should this information be considered as anoffer solicitation or to deal in investments. You should obtain specific 108419. investment An trust should be considered of only abalanced as part portfolio. Under nocircumstances in the United Kingdom. Registered Office: 10 Queen’s Terrace, Aberdeen AB10 1XL. Registered in Scotland No. Issued by Aberdeen Asset Managers Limited which is authorised and regulated by the Financial Conduct Authority information: important Other • • • • • • • • • Information Important exceed historic dividends investors and certain may be subject dividends. on to tax further Yields are estimated figures and may fluctuate, there are noguarantees that future dividends will match or investment. Movements in exchange rates will impact both on the level of income received and the capital value of your your investment could move sharply up down. or CompanyThe invests in emerging markets which tend to be more volatile than mature markets and the value of magnified movement NAV. in the in the (NAV) meaning that any movement in the value of the company’s assets will result in a CompanyThe may borrow to finance investment further (gearing). use of The gearing is likely to lead to volatility spread canwiden. the difference between the buying and selling prices, spread. the bid-offer If trading volumes fall, the bid-offer withAs all exchange investments the value of the Company’s shares purchased will immediately fall by Value. There is noguarantee that the market price of the Company’s shares will fully reflect their underlying Net Asset Investment trusts are specialised investments and may not be appropriate for all investors. Past performance is not aguide to future results. invested. valueThe of investments and the income from them canfall and investors may get back less than the amount 121041053_IT_ADVERT_ASIA_2300.indd 1 regulated by the Financial Conduct Authority in the UK. Telephone calls may be recorded. aberdeenstandard.com recorded. be may calls Telephone UK. the in Authority Conduct Financial the by regulated and authorised is which AB10 1XL, Aberdeen Terrace, 10 Queen’s Limited, Managers Asset Aberdeen by Issued discover more. discover We strive to invtrusts.co.uk/asia abrochure: 0808Request 500 4000 decision. investment an making to prior advice financial seek you We recommend maintained. be not may ISAs for andcircumstances the favourable treatment tax individual on depends benefits tax of value The Plan. Share and ISA the regarding otherwise, or positive Nothan markets. developed recommendation is made, risk more carry may which markets emerging in invest funds Asian invested. amount the than less back get may you and up as well as go down can them from income the and shares of value the remember, Please Asia. in more discover to aims who manager fund the with be direction, right the in portfolio your To steer face-to-face. on-the-ground, companies know to get to required is go wherever we Vietnam, to China from Singapore, to Thailand From invest. to look might we shares whose in company every meeting of apoint We make you. for investments best the be to believe we what locate to aiming there is someone know to good it’s world, the around halfway invest you When Plan Share and Trusts ISA Standard'sAberdeen Investment Asian

Please quote Please 13/03/2020 15:22 2300

DIY Investor Magazine | Apr 2020 10 economies; Middle East unrest, rising world debt, things that could have adetrimental effect the on world Even before this along came there were many other and products to sell. and retail sales, as businesses run to of out parts use, and Asia into the West. This will disturb manufacturing virusThe has unhooked the supply of from goods China subsequently South. turned correction, as all the world`s financial markets have It occurs to that me this might be the catalyst for amajor epidemic hot became news. That is until months ago, two when the COVID-19 100%. minor hiccups, has the risen FTSE100 by more than Since then, even though there have been anumber of THEMSELVES LITTLE SO AND ME?’ FOR FOR MONEY AFTER MUCH MADE MY SO INVESTMENTS, LOOKED WHO MANAGERS, HAD‘WHY FINANCIAL THE SALTYDOG OF THOUGHTS OUT’* GOES INVESTOR PART 1 TIDE THE WHEN ‘YOU NAKED WHO SWIMMING IS SEE always plain sailing.always plain approximately 45%, and Ilearned that investing was not over month afifteen period dropped the FTSE100 by alongThen the financial came when crisis of 2008, littleso for me? investments, made much so money for themselves and had the financial managers, looked who after my questionMy at the time was why, previous to that, to make the value of soar. my portfolios were aroll, on and it seemed easy and straight-forward At the time China and the Far Eastern Emerging markets the previousthe three years. during byhad fallen 48% just after the FTSE100 back in the mid 2000s, own financial investments I started looking after my If it is amajor collapse, it will have move. been agood suffer the of anxiety watching the markets retreat. will decide. Ido know that for the present, it is nice not to Whether this decision, was apoor or agood the future the hydrogen , and they have gone! funds and bullion; Ieven suppressed my infatuation with for markets to collapse, Isold everything except gold In early March, believing that there was agreat potential consuming, and expensive. Trading costs are cheap, but recovering losses is time better to be bold than indecisive. It was decision, apoor and Ilearnt in hindsight that it is Isold funds some and waitedBack in with 2008 the rest. improve? batten down the hatches and wait for the weather to Should we sell completely, out and cut and run, simply or should we now be doing with our portfolios. investors DIY As the question we have to answer is what ten! for starter economic world, and just maybe the corona-virus is the Any one of these has the potential to unhinge our rich and the poor. Intelligence, and the growing imbalance between the revolution, the imminent arrival of Robotics and Artificial wars, tariff climate USA China/ change and the green THEN YOU CAN DO NO MORE – THE REST IS LUCK!’ IS REST –THE YOUTHEN CAN MORE NO DO KNOWLEDGE TO MAKE BOAT THE SAFE, CREW AND YOU HAVE‘IF TAKEN ALL YOUR ACTION THE WITHIN PORTFOLIOS’ OUR WITH WHAT IS ANSWER DOING WE BE NOW SHOULD ‘AS WE HAVE INVESTORS QUESTION DIY THE TO you have taken all the action within your knowledge to skipperThe addressed my concerns by saying that if I now get to my point. sense andcommon luck to avoid casualties. sea, and abig wave coming board on required agility, haulingWhen the nets the boat was onto beam the not yet been designed. This was the time of trawlers, beam the stern trawler had uncomfortable. be course during that time the weather could occasions on tripsThe to Iceland were around five weeks and of from Hull. learner” the on Kingston Garnet, adeep sea fishing boat afourteenAs year old Iwent away as anunpaid “decky of their own experiences and knowledge. decisions canonly be made by the individual in the light This will incur asmall but loss is not abig deal. These conditions. realign according my portfolios to the existing market If it is not and it is just ahiccup, then Iwill reinvest and * Warren Buffet * Warren Chairman & Founder Douglas. Best wishes and investing, good weather. secure alivelihood. We canwait for better investment We have of the not luxury having fishing on to carry to and go into cash the or equivalent. If it looks stormy and you feel insecure, then take action unpredictable weather. the as marketsThe can, occasions on like now, be as possible. you still want your savings to be as safe as is sensibly course mistakesOf are unlikely to be life threatening, but is thisSo dissimilar so from investing in today’s markets? the rest is luck! make the boat and crew safe, then you cando nomore – CLICK HERE TO RECEIVE DIY INVESTOR INVESTOR DIY TO RECEIVE HERE CLICK MAKE SURE YOU DON’T MISS AN ISSUE; ISSUE; AN MISS YOU DON’T SURE MAKE

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11 DIY Investor Magazine Magazine Investor DIY 2020 Apr | DIY Investor Magazine | Apr 2020 12 we expect more to follow. they will be suspending payments this year and a number of companies have already announced that Given the pressures revenues, on cash flow and profits, DIVIDEND SUSPENSIONS revenue. the fast-changing environment and asudden of loss Businesses of all sizes have had to quickly adapt to leisure, tourism, airline, retail and construction sectors. worldthe have severely impacted others, the among governmentThe lockdowns implemented around corporate profits and dividends. implications for gross domestic product growth, and supply shock to the global economy with dramatic spread of the virus. It has resulted in both ademand governments around the world struggling to slow the COVID-19The pandemic is ahumanitarian crisis with COVID-19: OUTLOOK 2020 FOR IN DIVIDENDS • • • Takeaways Key and recover.and to function starts economy global the and end lockdowns enforced government current the peaking, to be looks cases virus in growth the 2021 level) (albeit alower base from provided in resume of sectors anumber from payments dividend see we ahead, could further Looking resilient more be should dividends their and positioned defensively more to be likely are pressure; 40% under around be will of companies types by these paid dividends and exposed cyclically are companies paying dividend- of global 60% Approximately growth, corporateproduct profits and dividends domestic for gross implications dramatic with economy global to the shock supply COVID-19 and ademand in resulted has

implications from the COVID-19implications pandemic. wide-reaching given the dividends for global outlook the assess Jane Shoemake, Lofthouse, Ben Head of Global Equity Income, and and Income, Equity of Global Head Investment Director at Janus Henderson Investors Henderson at Janus Investment Director attempt to survive. to continue as companies to look conserve cash in an coming weeks. Dividend cuts suspensions or are likely high and will be subject to significant downgrades in forecasts and dividend expectations globally remain too 2019. We believe that consensus corporate earnings when the first case was reported in China at the end of the current crisis has evolved in just three months from This happened over a15-18 month period, whereas Crisis (GFC) global dividends fell by almost 30% technology and healthcare. During the Global Financial as utilities, consumer staples, communication services, challenging environment. This includes sectors such their dividends should be more resilient despite the to be more defensively positioned and as aresult However, around of companies 40% globally are likely companies will be under pressure. the economy and dividends paid by of these types companies are cyclically exposed to the strength of dividend trends, of global dividend-paying around 60% The US accounts for approximately US The 40% unaffected far. so andthe Japan, US alongside Asia, have been relatively regions of the world, while lower yielding regions such as and Europe of the higher ex-UK, two dividend yielding We have seen asignificant number of cuts in the UK peak to trough with earnings down around 60% Global Dividend Index (JHGDI) previous on Based findings Henderson Janus the from theon quarterly dividend US payment cycle. will indicator be animportant of the impact of the crisis paid globally reporting the so forthcoming US season 1 , astudy into global 1 of all dividends 3 . 2 from from number of cases these yields unrealistic look with the falls, there are high now some yields offer, on but in a its ability to pay its dividend. Given recent stock price focused assessing on acompany’s free cash flow and fied both geographically and by sector while remaining than everimportant for income investors to be diversi Given the current environment, we believe that it is more global to economy function starts and recover. current government-enforced lockdowns end and the ed the growth in virus cases looks to be peaking, the resume (albeit in 2021 from alower base level), provid could see dividend payments from anumber of sectors and developing situation. ahead, Looking further we of dividend cuts globally given the highly in 2020 fluid It remains difficult to accurately forecast the likely scale consideration rather necessity. than have cut their dividends of out prudence and political crisis than in and the cases in GFC, companies some applied around the world at amuch earlier stage in this sided. There has been amount anenormous of stimulus can return to paying dividends once the crisis has sub keyThe question will be how quickly these companies business loans employee or payment schemes. while also accessing government-backed world and sectors some to paying justify dividends to It could be hard for companies of the parts in some that boards and senior management currently face. This highlights the social and political considerations pay. they have strong balance sheets and sufficient cash to companies have suspended dividends, even though In recent days there have been several instances where SOCIAL AND POLITICAL CONSIDERATIONS dividendon payments. considerations, have resulted in unprecedented pressure alongside regulatory, political and societal In Europe, annual general meeting (AGM) delays MORE TO FOLLOW’MORE PAYMENTS YEARDIVIDEND WE EXPECT AND THIS THATANNOUNCED SUSPENDING THEY WILL BE HAVE COMPANIES OF ‘A ALREADY NUMBER

- - - 3 2 1 Source: key. be and we think anactive approach to stock selection will fore be critical for investors to avoid these value traps, market already discounting adividend cut. It will there For promotional purposes. recommendation. investment an as qualify not does article this in information The invested. originally amount the back get not may you and rise as well as fall can it from income the and investment an of value The performance. future to aguide not is performance Past them. sell or buy to solicitation or offer any of part form or constitute not do article this within mentioned indices and sectors funds, securities, Any Investors. Henderson Janus at individuals/teams other of views the from differ may and publication of time the at author the of views the are These performance. future to aguide not is performance Past 2020 3April data, growth ONCE THE CRISIS HAS SUBSIDED’ CRISIS THE ONCE CAN TO RETURN PAYINGCOMPANIES DIVIDENDS QUICKLY HOW ‘THE WILL BE KEY QUESTION THESE Glossary Citi Research, 18 2020 March Research, Citi dividend World MSCI annualised on based stream, Data Refinitiv 2020 February 25, Index, Edition Dividend Global Henderson Janus

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13 DIY Investor Magazine Magazine Investor DIY 2020 Apr | DIY Investor Magazine | Apr 2020 14 EPIC FOREPIC INCOME on theon London EPIC) (LSE: in 2014, While the Ediston Investment Property Company listed expertise of our team. We live and breathe property. strongestThe for support our dividend from comes the A WEALTH EXPERIENCE OF *As at 31 December 2019 reserve if underlying earnings fluctuate. is also well covered –meaning there’s something in the fund, and we expect it to grow in future. dividend The We have maintained the dividend since the inception of helping the sustainability of the overall dividend. payments stem from adiversified of properties, portfolio Ediston currently offers a6.4%* annual . income Our A GROWING DIVIDEND expenses. to rely asteady on income stream to cover everyday dividend in monthly instalments –allowing our investors That’s why we’re able to pay ahighly competitive and secure as it canbe. us that the income we provide to our investors is as solid This understanding in-depth of our investments assures from top to bottom. investments are in properties we know inside and out At Ediston, we take that seriously –and literally. All of our foundations. firm on built If you’re looking for monthly income, you want it to be Investment Company Property Ediston Calum Bruce income stream available from property. these aspects offers opportunities for improving the liaison, lease negotiations and rent reviews. Each of through to refurbishment and redevelopment, to tenant This spans the range applications, from change-of-use investors. managing real estate for the benefit of our tenants and We have aprofound understanding of all aspects of satisfaction are maximised. flow are minimised and that occupancy rates and tenant We go to great lengths to ensure that risks to the cash economic environment. and breathe’ –how they fit into their location and their themselves to understand how the properties ‘live To do this, we well look beyond the physical buildings investors. our for income sustainable are not just paying for themselves but also paying out cashon flow. We want to be sure that our properties weWhen consider any investment, our focus is always BEYOND BRICKS AND MORTAR investment and development. our team has more years’ than 20 experience in property average, On marketUK since 2004. each member of the broader Ediston business has been operating in the potential for improvement is missed. ensuring that existing tenants are satisfied and that no of the process –from developing new properties to We sweat the small stuff, and we do it at every level itself.after entrepreneurial. holding No to is in left look our portfolio approachOur investment to property is intensive and UNCONSTRAINED ENTREPRENEURIALINTENSIVE, AND Issued and approved by Ediston Investment Services Limited which is authorised and regulated by the Financial Conduct Authority (FRN:706655) Authority Conduct Financial by the regulated and authorised is which Limited Services Investment by Ediston approved and Issued contents. its or documents this of use the from arising indirect) or direct (whether loss any for whatsoever liability or responsibility any have not shall representatives or advisers directors, respective their and Limited Services Investment Ediston byCompany, law, The permitted extent To fullest the Company. the of value the on impact a negative have may which of all value, in decline may and return of rate even an at grow not do typically illiquid, highly be can which assets property in invests Company The guaranteed. not are capital of repayment the and dividends of payment the particular, In guaranteed. not and only indicative is target or projection forecast, Any performance. or prospects future its or “Company”) (the PLC Company Investment Property Ediston of description acomplete toprovide purport not does and tochange subject is it publication, of date the at accurate tobe believed is article this in contained information Whilst invested. amount the back get not may investors and rise as well as fall can it from income any and investment market astock of value –the performance future of indicator areliable not is performance Past opportunity. investment any concerning risks and matters relevant other and financial tax, legal, tothe as advisers professional its consult and enquiries own its make should investor prospective Each advice. other or investment tax, legal, as construed be not should article this of contents The here note research Trust Intelligence Kepler Read WHY INVEST IN RETAIL IN WAREHOUSING? INVEST WHY

covered. managed investments, we’ve got you (and your dividend) So, if you need aregular income stream from actively compelling. We’re confident that our record of steady income is income and capital growth. where we see the greatest potential for sustainable withAnd nobenchmark, we’re free to focus the on areas

15 DIY Investor Magazine Magazine Investor DIY 2020 Apr | DIY Investor Magazine | Apr 2020 16 suppliers, employees and shareholders. company’s relationships customers, its with regulators, ecosystem surrounding the company; understanding the This research is complemented by our analysis of the time. over evolve competitive position is, and therefore how it is likely to their competitors and how importantly sustainable this dynamics they face, what differentiates them versus understand how companies are performing, the industry companyIn our 1,000+ meetings each year, we seek to have always been anintegral of our analysis. part Whilst we have nodirect mandate, ESG these factors ESG EMBEDDED long term for all stakeholders. factors is the best way to manage businesses over the However, we have always felt that considering ESG risks. company that isn’t actively managing the associated are becoming increasingly sensitive about owning any and regulators, we are conscious that shareholders under greater scrutiny from policymakers, consumers However, as issues such as climate change come ofThis our analysis part has always been important. governance (ESG) analysis in. comes sustainable. This is where our environmental, social and factors are equally to important ensure those returns are highly arange on of financial factors, but non-financial In order for companies to do this, they need to score return capital on and cangrow dividends over time. Trust the BlackRockOn Income and Investment Growth FOR LONG-TERMRETURNS GROWTH SUSTAINABLEESG: FINANCIAL , we are looking for companies that generate ahigh Trust PLC, discusses how they draw analysis ESG into their investment process. investors. Adam Avigdori, of the BlackRock Investment Income and Growth Co-Manager Environmental Social and Governance considerations are becoming more for important the long term. long the with conviction that these returns are sustainable over vitally our important, analysis of factors ESG provides us allocation, the balance sheet and return capital on are its revenue growth, profitability, cash generation and such,As while analysis of financial factors such as BEYOND FACTORS FINANCIAL RESOURCE EFFICIENCY’ ITS LIKE TO‘WE ACOMPANY IMPROVING SEE and the cost of capital. influence other stakeholders such as the shareholders This in turn caninfluence the financial factors as well as companies’ practices. ESG talent as employees are increasingly responsive to employer and influence its ability to attract and retain However, this canalso differentiate the company as an by services or reducing their environmental footprint. example,For acompany may differentiate its products increases. ESG on interdependencies between stakeholders as the focus long term. We are particularly interested in the growing as well as the opportunities facing companies over the analysisOur of the ecosystem highlights both the risks RETURNS’ MITIGATE TO AND SUSTAIN FINANCIAL RISKS THEIR TOSTAKEHOLDERS POSITIONED BETTER ARE SUSTAINABLE WITH ALL THEIR RELATIONSHIPS BELIEVE THAT‘WE THAT COMPANIES PROMOTE returns over the long term. positioned to mitigate risks and to sustain their financial relationships with all their stakeholders are better We believe that companies that promote sustainable

tenure, experience, geography and gender. of diversity independence, as such factors including Additionally, we at the look composition of the Board, policies are supportive of its long-term strategy. We want to ensure that acompany’s capital allocation remuneration strategy. its relationship with regulators and its management a company’s risk management and mitigation processes, long-term growth. ‘Governance’ involves understanding suppliers and customers is also vitally for important Evidence of asustainable relationship with both chain. supply the environment, plus ananalysis of labour practices along human resources –aliving wage, working agood and safety. We want to see robust management of commitment to high and improving standards of health analysisOur of social factors includes looking for a reduce their resource footprint. improving its resource efficiency and helping others to are using carbon and water. We like to see acompany intensity and have aclear understanding of how they companies that have low absolute and relative resource Within our environmental analysis, we consider independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research. investment of dissemination the of ahead dealing the on prohibition any to subject not is and research investment of independence the promote to designed requirements legal with accordance in prepared been not has report The by BlackRock. commissioned communication marketing anon-independent is This offer. such any with connection in prepared been not has and funds BlackRock any in invest to anyone to invitation or offer an constitute not does and only purposes information for is document This to advice prior professional investing. independent seek you We recommend www.blackrock.co.uk/its. at pages product relevant the on available are documentation other and KID The investment. the of profile risk the about information more gives which (KID) Document Investor Key the in risks specific fund the read please suitable, is product our whether understand you To ensure tolerance. risk and needs individual your against investment this of suitability the considered not has BlackRock incidentally. only available made being are research such of results The purpose. own its for by BlackRock on acted been have may and procured been has material this in research Any trust. investment an in shares are they because products investment non-mainstream to apply which restrictions Authority’s Conduct Financial the from excluded are securities The future. foreseeable the for so do to continue to intends and products investment non-mainstream to relation in rules Authority’s Conduct Financial the with accordance in investors retail ordinary to by IFAs recommended be can securities its that so affairs its conducts currently Trust PLC Investment Growth and Income BlackRock The performance. NAV than higher or lower are that returns realise may shareholders and performance, price share as same the not is performance (NAV) Value Asset Net licence. under used is and PLC Exchange Stock London the of atrademark is SEDOL™ trusts. investment listed other in assets gross 15% its of than more invest not will Company The Exchange. the of member a through be only may dealing and Exchange Stock London the on traded are shares Company’s The Limited. (UK) Management Investment BlackRock to services ancillary other and management investment certain delegated has BFM AIFM. the as (BFM) Limited Managers Fund by BlackRock managed is Company The by BlackRock. conducted activities authorised of alist for website Authority Conduct Financial the to refer Please Authority. Conduct Financial by the regulated and authorised Limited, (UK) Management Investment by BlackRock Issued Information Important fall. investments underlying the of value the when suffered losses larger even in result Trust can by the used borrowing, as such strategies, Investment risk: fair. Gearing considered aprice at or price market latest the at investment the realise to able be not may Fund the cases, extreme In predictable. less be to investments these of value the causes often which liquidity low have may investments Fund’s The risk: Liquidity Trust Risks Specific time. to time from change may taxation of basis and Levels substantially. and suddenly fall may investment an of value the and fund volatility ahigher of case the in marked particularly be may Fluctuation increase. or diminish to investments of value the cause may currencies between exchange of rates the in Changes strategy. or aproduct selecting when consideration of factor sole the be not should and results future or current of indicator areliable not is performance Past Risk Warnings FOR MORE INFORMATION ON THIS TRUST CLICK HERE CLICK TRUST THIS ON INFORMATION MORE FOR

sector, click here the opportunities presented by the income and growth moreFor information this on trust and how to access BlackRock as at November 2019. Unless otherwise stated all data is sourced from creating asustainable business for the long term. goals for our shareholders. They are and parcel part of analysis of factors ESG helps us deliver these dual in capital and income to our investors. We believe this This trust aims to deliver long-term consistent growth potential for long-term value creation. helps align companies’ behaviours to the maximise with companies regularly. We believe this engagement We with partner our colleagues in Stewardship to engage Additionally, BlackRock has alarge Stewardship team. this information into our investment processes. data with and theArmed necessary tools, we canbring considerations. sustainability of informed They provide us with data and insights to keep us well by BlackRock’s large internal team of specialists. ESG In undertaking this analysis, ESG we are supported SUPPORT TEAM

17 DIY Investor Magazine Magazine Investor DIY 2020 Apr | DIY Investor Magazine | Apr 2020 18 on theon risk they pose in spreading Covid-19. mobiles which register red, amber green or depending In China people have been given anApp for their each has used technology of the as solution. part disease without resorting to shutting down the economy; controls canbe put in place to halt the spread of the China and Korea might ideas offer some of how greater must learn to live with it. cannot eliminate this virus in the short-term and that we Beyond the lockdown, it is becoming clear that we sections of the fabric to of the deteriorate. economy start the longer we remain in this crisis, the greater the risk as Currently, the immediate damage is less structural but knees. when the bankingexperienced sector was in its on 2008 is different to the structural damage to the economy the more business hairdressers will miss on; out this surge in demand. However, the longer the lockdown, people will rush back, and hairdressers can expect a from going to salons but once the quarantine is lifted, Hairdressers lost custom as their clients were prevented DOWN’ SWATHESLARGE CLOSED ARE ECONOMY THE OF AMATERIAL FACING ARE ‘WE AS GDP IN COLLAPSE thehomes, more dishevelled they will to look. start hairdressers; are people longer to confined the their the context of individual businesses; take for example It is perhaps easiest to put these considerations in once these controls are lifted. are beginning to consider the extent of any bounce-back large swathes of the economy are closed down and we In addition, we are facing amaterial collapse as in GDP yet. bear markets and we are probably not of out the woods in abull market, they are much more associated with do not expect to see market changes of that magnitude Markets continue to be amazingly volatile: in general, we TO BACK?GOING BOUNCE HOW ECONOMY THE IS in Europe and in the UK coming months. hope isThe that measures like these will be put in place feet. their on quarantine which allow businesses to gradually get back people’s movement without resorting to full-scale This demonstrates that there are ways of managing the virus and are at little risk of contracting the disease. carriages buses or are unlikely to have had contact with encouraged to stay at home; those travelling in other Covid-19, their fellow passengers are alerted and that on If someone carriage subsequently contracts carriage bus or that they wish to travel on. people are able to flash code aparticular on aQR train voluntarily, it is nonetheless incredibly sophisticated; Korea has asimilar system and although its use is more expected. there has been afresh outbreak; then self-isolation is the illness, the or individual resides in anarea where potentially amember of the immediate household has A red display confirms aclose association with the virus, are imposed. the app flashes amber and restrictions some travel on relatively freely; if anindividual has had association some in close contact with anyone infected and cantravel A green display confirms that the holder has not been DIY Investor Magazine | Apr 2020 20 dropped even more. my portfolio’s performance as major most markets have Despite afall of just over 15%, Idon’t feel too bad about MONTHS THREE A BRUISING severe.less first time in mid-2017; that on basis, the fall looks alot they were in late 2018, having reached that point for the flipThe side is global markets are just back to the level theon way up as well. records right, left, and centre; maybe it will surprise us less thanbottom five weeks later? This crash has set started falling did so we 20th, February on really see the knows who whatBut will happen Markets next? only moves. March and we’re seeing fewer days with major market Stock markets have risen alittle from the lows of 23rd don’t see cases rise again. although things may speed up if China Korea and South lifted’; Iexpect governments most to be overly cautious, continue for and how quickly the restrictions might be Attention is already shifting to how long the lockdown will lines and other of vital the services. NHS others, not to mention the courage of those the on front It’s amazing to see many so people round and help level off, and then hopefully decline. we’re waiting for new cases and deaths to decelerate, now; developed most countries are in lockdown and It feels like we’re through the first phase of this crisis right TAKING STOCK mention the real world, never fails to surprise. that you’ve seen it all; but the stock market, not to afewAfter decades of investing, it’s tempting to think HOLDING ON TIGHT this year; atenth has dropped by more than 50%! Two-thirds has 100 dropped more by or of 20% the FTSE less across the board. hasn’t helped but there have drops been heavy more or the big weighting towards 100 oil stocks in the FTSE but that hasn’t stopped them under performing yet again; marketsUK were supposedly cheap of at 2020 the start sterling terms ‘only’ declined 17%. the pound against the dollar has meant global markets in market has fallen nearly 25%; adecline in the value of and the UK in is 20% the down US some 500 S&P The Vanguard UK All-Share IndexVanguard (fund) All-Share UK Vanguard (fund) Life Strategy 100 (fund) Cap All Global Vanguard FTSE portfolio My PORTFOLIO / BENCHMARK -24.8% -18.0% -17.0% -15.1% 2020 Q1 Q1 JAN 18 JAN SINCE +4.3% -19.1% -5.8% -3.6%

a full set! myself for having just one holding in the red There’s awide range: at the end of 2019, Iwas preening BYPERFORMANCE HOLDING elsewhere. a better comparison against the returns Icould get use fund prices rather than actual indices to provide trackers as additional frames of reference though, and I track my performance against standard global and UK weighting). to measure against (a global tracker with a24% UK Vanguard Life Strategy fund 100 the best benchmark ismy weighted portfolio towards Iconsider the UK; the I have acore of of global trusts and funds but 25-30% my returnsmeasuring to be the case, but I’m yet to hit the three-year mark afewout extra percentage points ayear; that still seems global market indices fairly closely while hopefully eking Given portfolio of the make-up my Henderson Smaller Companies Smaller Henderson Companies Smaller BlackRock Acorn Income Murray International Caledonia Private Equity Princess VentureBaronsmead Trust JPMorgan Global G&I Vanguard ETF All-World Partners Capital RIT Energy Storage House Gresham Capital HG Smithson Lindsell Train Global Bluefield Income Solar Equity Fundsmith Infrastructure HICL HOLDING in this way. , Iexpect to track Q1 2020 RETURN Q1 2020 , now Ihave -30.6% -34.6% -33.5% -22.2% -22.2% -36.4% -16.3% -10.9% -10.9% -13.6% -15.5% -14.6% -15.4% -12.1% -4.0% -9.6% -7.9% approach over several holdings. my positions here and will probably take ascattergun theseem likely most places Iwill invest; I’m building smaller UK The funds and renewable/infrastructure trusts movements. just do everything at once to avoid obsessing over price and possibly three tranches over afew weeks but Imight year;ISA my plan is to split my contributions into two I’m planning to put more some cash to work in the new TOP-UPS ISA have now been wiped out. leapt 45% in 2019 those so gains plus alittle bit more an absolute hammering; both Henderson and BlackRock threeThe smaller UK company funds Iown have taken March markets and US falling abit later that day. difference, with its price being taken at 4:30 pm 31st on global tracker Imeasure against; this might be atiming VanguardThe ETF back. had analarming lurch downwards acouple of weeks disappointing: has RIT been the best of the bunch, but and Murray International moreMy conservative global funds —RIT, Caledonia, the new normal, gets worked into their net asset values. Baronsmead and Princess, privateMy trio equity —HGCapital, jumped the gun somewhat. away from growth and back towards value to seem have thatThose said last year that markets were shifting Global). Train Lindsell and Smithson, funds (Fundsmith, well,pretty though, as have the ‘quality’ end of my global threeMy renewable/infrastructure funds have held up —have but it done OK will be awhile until Ihave did better than the Vanguard —have been somewhat

21 DIY Investor Magazine Magazine Investor DIY 2020 Apr | DIY Investor Magazine | Apr 2020 22 borrowing levels have reduced alittle. investments falling, but only from 7% to absolute 9%, so Gearing has risen abit, due to the underlying value of however, it did spike alot higher in mid-March. from 1.4% at the end of 2019 to 8.5% at the end of Q1; toLittle report -the average trust discount has gone TRUSTS INVESTMENT WORLD OF WIDER THE May the so picture should be alot clearer then. positions, are due to announce dividends in late April or Nine of my trusts, roughly half of my total number of but yet to be paid. regards to future dividends those or already announced but notrust has announced anything yet, either with smaller company funds would the seem vulnerable most I’d be surprised if my holdings cut that far; my UK source for this information. across market,30% the UK but Ican’t find afree online haveSome referenced futures pricing in dividend cuts of expecting afew holdings to cut their dividends. could be curtailed for the remainder as I’m of 2020, anything that seems to have fallen unduly harshly; that use the cash to my position tweak sizes and top up thingOne Ido like to do is reinvest my dividends and DICEY DIVIDENDS anything -Iwouldn’t expect any major changes. my position weightings and take aview whether to shift do so; when this crisis has passed, Iwill take at alook I haven’t sold any trusts funds or and have noplans to stage) and Smithson some Income Solar Bluefield This year, I’ve added alittle Acorn Income FAR SO BUYING (before corona took centre . and passing day, we’re getting closer to the end of this crisis. shops to seem be mostly back to normal, but with every virtual classessome to break things up and the food we’ve settled into a fairly regular routine; there have been kidsOur have school for been three off weeks now and KEEP SAFE lists could be alittle this shorter time next year. generation next the They have also updated their list of dividend heroes industry has changed over the last decades two plus aninteresting at the look way the investment trust managers hasAIC published alist trust of the longest-serving take 6months to deploy it all. raised it so has held up better than most’; it expects to March, ofAs 20st it had only invested of the cash 29% raised £103m. 21ston February, just as prices started to decline, and taking place; Value Active Nippon New issues have completely dried up, with just one IPO CLICK HERE TO RECEIVE DIY INVESTOR INVESTOR DIY TO RECEIVE HERE CLICK MAKE SURE YOU DON’T MISS AN ISSUE; ISSUE; AN MISS YOU DON’T SURE MAKE and their thoughts how on to invest now, MAGAZINE TO YOUR INBOX MAGAZINE TO SUBSCRIBE VISIT: TO SUBSCRIBE with over 10 years of increases; both joined the market . and NOBODY CARES MORE ABOUT YOUR MONEY THAN YOU INVESTING REVOLUTION INVESTING to existing investors and education to those new to savings and investment; and newshare to savings to those education investors and to existing -DIY information Investor enabler delivers the key the is technology and Education with comfortable whilst goals to achieve their them of that allows investments portfolio a building and objectives, their ever than more setting are freedoms, of new pension advantage fees taking or ladder, for tuition planning property to the get on seeking Whether that was previously to bypay RDR, unwilling or for something to advice access Denied free, millions of people now take full or partial control of their finances. of their control partial take or now full of people free, millions LEADING THE DIY experience and learn to make informed investment decisions. investment decisions. to make learn informed and experience the level of risk their money is exposed to. exposed is money level their the of risk

DIY Investor Magazine | Apr 2020 24 even less likely to collapse than corporations. lower coupons still being –the that theory countries are ‘gilts’ (those issued by the of Bank England), tend to pay Government bonds, also as known ‘sovereign bonds’ or owning their bonds is lower. lower coupon –because the risk premium attached to earnings and high ‘ratings’ from agencies tend to pay a Very large and well established companies with solid country) is, the higher the coupon its bonds will offer. premium’ attached to them; the riskier acompany (or amount ofThe income that bonds pay reflects the ‘risk raise money. non-government organisations like the World to Bank, Bonds canbe issued by acorporation, agovernment or BONDS? CAN ISSUE WHO to the investor while he she or holds it. potential for capital growth, but delivers regular income A bond is form of investment which usually offers little payments are made electronically into your account. claim their payment, hence the term; today, interest coupons which investors would send to the issuer to individually-numbered had detachable, originally Bonds bondholder their initial investment in full. date -‘maturity’ -the issuer is obliged to pay back the ‘coupons’, and once the bond reaches its expiry Interest is paid via aseries of annual semi-annual or securities’. sometimes as known ‘fixed interest’ investments, ‘debt or is set when the bond is issued, which is why bonds are fixed period; the rate of interest and duration of the loan Bonds guarantee to pay afixed rate of interest over a their portfolio. considers why investors DIY may wish to hold them in to aninvestor loans who it money; Christian Leeming company’s profits, from acompany abond is an‘IOU’ Unlike ashare, where investors literally buy ashare in a WHAT BONDS? ARE INVESTING BASICS: generous rates of interest were in demand for those minimum and investment, with relatively typically £2,000, offered bondsMost issued arelatively ORB on low the investment to maturity. marketthe secondary for those that did not wish to hold accessible to the retail investor and providing liquidity in the objective of making a new generation of retail bonds launched the Order for Retail Book Bonds (ORB) with In 2010 February the London Stock Exchange (LSE) investors for the additional risk of buying their bonds. need to pay much higher interest rates to compensate situation, already or saddled with alot of debt, typically quite low interest rates; companies financial in apoor to pay bondholders back and their bonds typically have Well-known international companies are seen as likely those companies that go bust. buying ‘high yield’ ‘junk or bonds’ –but only if they avoid above; investors canachieve higher rates of interest by ‘Investment grade’ bonds are those rated and BBB etc. BBB+ AA-, todescending AA+, AA, order from AAA of the investor being repaid –by grading bonds in and Fitch provide aguide to credit quality –the likelihood Ratings agencies such as Standard and Poor’s, Moody’s the coupon. they should always be able to print more money to pay issuers and as long as they borrow in their own currency benchmark the bond market; they are by far the biggest been seen as the secure most and as such are used to Gilts ‘treasuries’ inor the UK have in the US, traditionally 0.21% term whilst offer 0.64%. those with a20-year gilts which pay after out just amonth offer ayield of for the risk posed by the longer holding period; today, greater the return the on bond, which is compensation In instances, most the longer the period to maturity, the up.prices reduced as more people compete to buy them, forcing decreased; it has also meant that yields bonds on have interest rates companies have paid to issue bonds has the last couple of decades, which has meant that the There has been increasing demand for bonds over interest rate will be below 5%. rate will be more than 5%, and if it trades above ‘par’ the yield is 5%; if the bond trades below ‘par’, the interest If abond with aninterest rate of 5% is trading at ‘par’, its rise and fall. above below or ‘par’ for of most their lives as markets bond’s price in the market; bonds most trade either issued the so yield is that rate of interest relative to the rateThe of interest paid by the bond is set when it is redeemed at face value. and assuming the issuer doesn’t go bust they are also Bonds are issued at ‘par’, of their 100% or face value, are bought and sold the on basis of their ‘yield’. Whereas shares are quoted the on basis of price, bonds WHAT YIELD? IS mini-bonds to their great Expert Bond Retail cost. See and were some lured by the siren call of unregulated investing for income; unfortunately issuance was scarce

For moreFor about fixed income Investor. visit DIY 60%. be of should your portfolio be in bonds whilst it should at 60, proportion of bonds in line with their age 30% -aged 30, thumb which states that income investors should hold a cornerstone of their portfolio; there is an‘age-old’ rule of those investingFor for income, bonds are likely to be a the advantage of providing diversification too. which track(ETF) different baskets of bonds; these have which invest in fixed income and exchange-traded funds Alternatives are provided by funds and investment trusts more and are typically harder to sell than shares. often have to be traded in denominations or of £10,000 over the phone rather than online and corporate bonds investmentmost platforms require you to trade bonds and corporate bonds is not as straightforward as shares; investors, DIY For investing in individual government the long term shares better. perform volatile than shares, is that although over the trade-off Another advantage of bonds is that they tend to be less money you might get back. of bond youthe type hold determines how much of your banks and trade creditors in terms of being paid, and of getting something back, although they rank below the If the company bust goes bondholders have achance instead. the profits; bonds are aclaim acompany’s on assets their investment as shares only entitle you to ashare of if acompany bust goes shareholders could lose all of A key advantage of bonds compared with shares is that BONDS? OF WHAT CONS PROS AND THE ARE excess years of 50 years,0-7 7-15 years and 15 years more, or in with some long indeed; gilts in three come main maturity dates – Particularly for government debt the lifespan canbe very bonds. Price volatility also tends to be higher longer-dated on

25 DIY Investor Magazine Magazine Investor DIY 2020 Apr | DIY Investor Magazine | Apr 2020 26 THAN ONES’ AGREAT MANY MEDIOCRE TO BETTER ‘IT’S OWN AFEW GREAT BUSINESSES Would holding Ibe better off that company instead? decisions; do Iunderstand this business well enough? Taking fewer positions forces you to take tough portfolios. of; of most the best investors Iknow have concentrated are only many so Icandevelop adeep understanding I like to fully understand the companies Iown, and there reasons: holdings for afewprefer of between 20-30 aportfolio companies for the sake of it and increase my risk; I businesses even rarer; Idon’t want to add mediocre Great businesses are rare, well managed great agree. I great businesses than agreat many mediocre ones’ and Profits’and Uncommon said ‘it’s better to own afew Phil Fisher, investor US Stocks and author of ‘Common TO HOLD? STOCKS MANY HOW YOU’RE PROBABLY TO VERY DO NOT WELL’ GOING ALLOCATE YOU DON’T ‘IF EFFECTIVELY MONIES consider when constructing and managing my portfolio. finding what works for you; here are of some the things I depends upon your attitude to risk and investment - style It’s abalancing act, and there is no‘right’ way, it not overly so. conflicts; returns, minimise risk, maximise diversify, but constructionPortfolio is personal avery thing full of well and you may also expose yourself to hidden risks. allocate effectively you’re probably not going to do very However astock good picker you are, if you don’t investor Hannah Barnaby are exposed to and the returns you achieve –writes DIY stocks, but it canhave aprofound effect the on risk you constructionPortfolio gets less attention than picking CONSTRUCT AN PORTFOLIO EQUITY HOWDIY INVESTING: TO trading activity to aminimum. badlyor there is usually reason, good to keep Itry so watch it then double in price; if astock is performing well holding because we thought it had run of out puff, only to at. investors Most will have made adecision to sell a decisions which, like investors, most I’m not good very businesses than to trying time buying and selling I prefer to spend my time better understanding earns itself abigger position in the portfolio. I let my winners run, and if aholding well performs it costs with noguarantee of better returns. winners and topping up losers leads to higher trading keep weightings fixed; constant tinkering by pruning unlike investors some Ido not regularly re-balance to Holdings change relative to one another over time, but business that Iunderstand less well. in the economy because or there of is their apart either because they have obvious sensitivity to changes I take smaller positions in companies Ideem more risky, understand. recurringor revenue that are relatively simple to that provide essential services, with or goods repeat bulkThe of consists my portfolio of lower risk businesses determining my biggest positions. I focus first risk on rather than potential returns when to it comes When deciding the on sizing of my positions TO ALLOCATE MUCH HOW HOLDING? TO EACH minimal.. is positions holdings, the benefits for diversifying risk by adding companies Iown; studies show that beyond about 30 This approach really allows to me focus in the on BALANCE TO KEEP WEIGHTINGS FIXED’ BALANCE TO KEEP WEIGHTINGS INVESTORS NOT IDO REGULARLY SOME ‘UNLIKE RE- discretionary pursuits. services, as or goods opposed to more serving many of the companies Iown provide truly essential crisisThe has prompted to me think harder about how toservices other companies. consumer businesses with those supplying or goods constructionportfolio as amatter of course blends COVID-19 was abolt of out the blue, but prudent hard. stepping outside their have homes been hit particularly are; consumer-facing businesses that rely people on to think even harder about how well diversified they coronaThe virus crisis will inevitably cause investors products are actually all plays oil on and gas prices. offering awide range of seemingly unconnected canbe true same inThe industrials where companies prices. house in theme that the same will all suffer from adecline in sectors (banks, house building and estate agency) but and Purple Bricks you’d be invested in three different token, theBy same if you owned Barclays, Persimmon footfall narrow -avery remit, and unlikely to pay off. your bets consumer spending, UK on but High on Street and atraditional retailer, you’re not only concentrating exampleFor if you own apub group, arestaurant chain ensure that each holding offers something different. terms of customers, geographies, industries served and diversification; you also need to consider any overlap in isn’t enough and canoften give afalse sense of and shun the rest. However, focusing sector on alone I generally to own the try best business in asector I avoid having too much exposure to any one sector; DIVERSIFICATION? TOHOW ACHIEVE DIVERSIFICATION’ OF CAN GIVE AND AFALSE OFTEN SENSE ENOUGH SECTOR ALONE ON ISN’T FOCUSING ‘HOWEVER,

better as they inevitably will. Stay safe, Hannah. companies remain strong I’ll so wait for things to get long term; the factors that motivated to me buy particular losses just now, but for investing me is absolutely for the I’ll not pretend that I’m not chunky sitting paper some on concentrating too narrowly. groups, industries, geographies and on, so rather than as long as they are played via different customer It’s fine to have three four or broad themes to aportfolio different. businesses and make sure each offers something to be complicated; own asmall collection of great Constructing asuccessful doesn’t need portfolio equity can introduce unintended risks into aportfolio. compromising other aspects of the investment case and pursuit of diversification for diversification’s sake leads to a company’s business model; in my experience the I prefer to focus key on aspects such as the quality of Bwill happenA, which will benefit C’. overriding principle of diversification; ‘if interest rates do to explain why they hold stocks certain with the Investors up with often come complicated dependencies not something that Ido. diversification assumed just of because the benefits, is method and objectives, and adding those that do not, I have adept become at identifying companies that fit my companies exceptional. but also the points of difference that make some I investigate, the more threads, Icanidentify common applied across any sector theme;or the more companies companies because these basic principles canbe I have specifically avoided talking about individual carefully. to every sector theme, or you have to choose your bets and that is replicable; it doesn’t having mean exposure to up with come amethod that with comfortable Iam personal thing, and it has taken anumber me of years I started by saying construction that portfolio is avery A PERSONAL JOURNEY

27 DIY Investor Magazine Magazine Investor DIY 2020 Apr | DIY Investor Magazine | Apr 2020 28 every time.every a crisis to repair balance sheets. It’s debt that gets you expensive, but never more than so when issued during atAnd Equity what may cost? be deemed to be you when you need to re-finance the debt? Management should ask: will your lenders be there for capital. Debt isn’t. might have reminded companies, is equity permanent I hoped the global financial crisis (GFC) twelve years ago ready to be taken by out rivals private or equity. opposed to ‘strong prudent’, or they are sitting ducks, they cry. If their balance sheet is ‘flabby inefficient’ or as as feeble in the extreme. What’s wrong with 5x, 6x, 7x, endorse leverage much above the 3x standard metrics, shareholdersUS regard shareholders’ UK reluctance to BUSINESSES’ CAPITAL EQUITY DEBT AND OF TO FINANCE RELATIVE THE TO RE-THINK NEED ‘WE ATTRACTIONS TO BUST’ AND HISTORY THE BOOKS FINALLYLET’S CONSIGN ‘BOOM had with management teams about the fact that their I have lost count of the number of conversations I’ve up the returns to by equity maximising the use of debt. demanding that Boards and management teams juice the academic blessing of the ‘efficient balance sheet’ capital and debt cheap has grown ever louder, with Over my career the mantra that is equity expensive debt and capital equity to finance businesses. one,For we need to re-think the relative attractions of consequences of what we are living through. must also begin to think about the longer-term by Covid-19, companies, investors and Government Whilst we all focus the on immediate challenges posed can we achieve greater economic stability, and reduce the risk of future market equity crises. compensation and the relationship between business and the public. Only by doing so, he argues, for afundamentalopportunity rethink about the role of equity, leverage, dividend policies, executive for investors,cry companies, governments and broader society to treat the corona virus crisis as an Investors Global Merian at equities UK of head Buxton, Richard equity, such as the tax-deductibility of interest payments. benefits which bias companies towards debt finance not Treasury figure, challenging the wisdom of the tax I remember aconversation with asenior after the GFC economic to activity cancome agrinding halt overnight. a company to use relative to equity, in aworld where We need to re-think what is the right amount of debt for and downturns. aneconomymean more capable of withstanding shocks corporate behaviour. Stronger balance sheets would sheets could prove powerful very over time in changing A tax-driven nudge in favour of more prudent balance of debtbenefits finance? thoughtsome be given to gradually phasing the out tax rather than simply raise corporate rates, tax might of but their extraordinary necessary schemes, support exploring ways in which to raise to taxation pay for some Given that in due course the Government will be in away which was revenue neutral to the Exchequer. attempt to overhaul this would be impossible, particularly laughed,He suggesting it was entrenched so that to EQUITY’ ACOMPANY DEBT FOR RELATIVE TOOF USE TO WHAT TO AMOUNT RE-THINK NEED ‘WE RIGHT THE IS , issues animpassioned rallying dangerously thin. steadily this cycle to levels where dividend cover looked payoutThe ratio inmarket the UK has been rising leverage, then dividends are also going to be lower. If returns are equity on going to be lower with less the Capital Asset Pricing Model. Academia along cancome later, once it has re-thought of policy-making in Government and amongst Boards. the solution. This needs are-think at the highest levels Less leverage, less corporate debt, has to of be apart Government now. for abail-out benefit of management –only to go cap in hand to the companies have bought back millions of shares –to the Americans are rightly asking how during times the good coming years again. in crisis and collapse cannot be the playbook for the Slow, gradual, mistrusted bull equity markets ending can be better protected against such events. has to be are-think also how on economies and society monumental after crisesBut two in twelve years, there lower returns from investment in equities. realistically this means lower earnings multiples and valuations, higher equity returns justify stable could more returns equity. on Whilst you might argue that lower but Less gearing balance on sheets lower mean does economy? Would this not be amore prudent model for the UK upturn, without recourse to Government assistance. prudently in difficult times, to emerge stronger into the It would enable companies to retain workers and invest THERE HASTHERE TO ARE-THINK’ BE TWELVE‘AFTER IN MONUMENTAL TWO CRISES YEARS,

making was radical, in my view. take all their stakeholders into account in their decision- – and not maximising shareholder value –but should Its insistence that companies should have a purpose in to trying re-think corporate capitalism. year’sLast revised Corporate was Code apowerful step dividend growth. to correct over-distribution build or headroom for future which use the current as ageneral uncertainty amnesty stockThe market will take adim view of companies shareholders. earningsdo with so good cover, do resume returns to that is once the outlook clearer, companies that can This is prudent and sensible, though it is important dividend payments to protect their balance sheets. manyeconomic outlook, companies are suspending Given the immediate level about the of uncertainty RELATIONSHIP WITH WIDER SOCIETY’ WITH WIDER RELATIONSHIP THEIR TO RESET CRISIS THIS NOT USE DID COMPANIES IF OPPORTUNITY MISSED ‘AN ENORMOUS

29 DIY Investor Magazine Magazine Investor DIY 2020 Apr | DIY Investor Magazine | Apr 2020 30 First appeared in Financial in News appeared First 04/20/0015 MGI Switzerland. Zürich, 8001 4, Schützengasse GmbH, (Schweiz) Investors Global by Merian issued is communication this Switzerland In MAS. by the reviewed been not has document This MAS. by the regulated or licensed not is Investors Global Merian Investors. Global Merian with affiliated is Limited Pte (Singapore) Investors Global Merian Singapore. in (“MAS”) Singapore of Authority Monetary by the regulated or licensed not is which Limited, Pte (Singapore) Investors Global by Merian issued is document this Singapore In Kong. Hong in Commission Futures and Securities by the reviewed been not has communication This Kong. Hong in Type activities Type out 1and 4regulated to carry licensed is Pacific) Limited (Asia Investors Global Merian Pacific) Limited. (Asia Investors Global by Merian issued is communication this Kong Hong In criteria. and assumptions different using of aresult as Investors Global Merian as group same the within companies or areas business by other expressed toopinions contrary be or differ may and notice without tochange subject are document this in expressed opinions Any document. the to in referred developments or markets securities, the of summary or statement acomplete tobe intended it is nor herein, contained information the of reliability or accuracy, completeness tothe relation in provided is implied, or expressed either warranty, or representation No jurisdiction. any in instruments financial related or securities any sell or tobuy offer an or asolicitation as construed be not should communication This recommendation. apersonal or advice investment or professional financial, constitutes communication this in only. Nothing purposes information for is 171847). communication This (FRN: Authority Conduct Financial by the regulated and authorised is and 02949554) (number: Wales and England in registered is Investors Global Merian 4WR. EC4P Kingdom, United London, Hill, 2Lambeth House, Bridge Millennium Investors”), Global (“Merian Limited (UK) Investors Global by Merian issued is communication This fall. or rise to investments overseas of value the cause may changes rate Exchange money. lose may and investment an on a profit make to certain not is investor an this, of Because invested. originally amount the of any back get not may investors and up as well as down go may them from income the and investments of value The shares. of redemption and issue the on incurred costs and account commissions the take of not does data performance The risk. involves Investment repeated. be not may and performance future to aguide not is performance Past decisions dividends –on executive or pay, most pay, the Government will feel aright to influence future rate holidays contributing or to furloughed workers Government schemes to help them, through business companiesBut are aware that if they participate in cuts and abandoned their bonuses. and communities. Management teams have offered pay employees through this crisis, alongside their suppliers working much harder to their support customers and We have seen numerous examples of companies thinking, it is the Covid-19 crisis. If ever there has been acatalyst to kick-start this re- general into account in the decisions they have made. the communities in which they operate and society in employees, suppliers, customers, the environment, societyBoards have to explain how they have taken not use this crisis to reset their relationship with wider missedan enormous if companies opportunity did on 13 April 2020 2020 13 on April VISIT MERIAN GLOBALVISIT INVESTORS Bring it on. it Bring together benefit. mutual for our market and amore equitable society, working better amoreBut stable economy, aless crisis-prone equity Lower executive remuneration. Lower leverage, lower returns equity, on lower dividends. integrity canbe rebuilt. only way in which confidence in corporate behaviour and Code’s emphasis treating on all stakeholders fairly is the business high. is sky Embracing the spirit of the new relationship with wider society. Public mistrust of companies did not use this crisis to reset their It would be missed anenormous if opportunity but this misses the bigger picture. companiesSome shun Government help for this reason, obviously –as aquid pro quo for now. support 121039877_IT_ADVERT_DIY_Investor_Online_Magazine_2183.indd 1 regulated by the Financial Conduct Authority in the UK. Telephone calls may be recorded. aberdeenstandard.com recorded. be may calls Telephone UK. the in Authority Conduct Financial the by regulated and authorised is which AB10 1XL, Aberdeen Terrace, 10 Queen’s Limited, Managers Asset Aberdeen by Issued further. explore to strive We invtrusts.co.uk abrochure: 0808Request 500 4000 decision. investment an making to prior advice financial seek you We recommend maintained. be not may ISAs for andcircumstances the favourable treatment tax individual on depends benefits tax of value The Plan. Share and ISA the regarding No recommendation is or made, otherwise, positive invested. amount the than less back get may you and up as well as go down can them from income the and shares of value the remember, Please on your behalf. opportunities investment best the out seek to aim we ways the of one just it’s But commitment. big awfully an –that’s world the around investing companies investment of range awide With them. hold we while and shares their in invest we –before are they –wherever companies visit to goal our it make we why That’s face-to-face. investments your know to getting for substitute no there’s We believe Plan Share and ISA StandardAberdeen Investment Trusts

Please quote Please 18/12/2019 10:29 2183

DIY Investor Magazine | Apr 2020 32 of corona virus. corona of and nowthen the the spread Financial Crisis of 2008/9 largestThe being the dot.com crash, starting in 2000, significantbeen some tumbles. tumbles, and in the last twenty-five years there have feeling generated by being of out the market when it However, they always fail to mention the pleasant very soars, then you and are your portfolio ‘dead meat’. miss the few days during the recovery, when the markets the market, not timing the market’; they will say that if you They maintain that successful investing in is about ‘time wisely and then hold them through times good and bad. hold’ approach where you choose your investments andBy large the financial industry promotes a‘buy and carefully. now is the time to choose your ‘expert’ media input very course thereOf are that some say they do know, but OUT OF THE MARKET THE ITOUT TUMBLES’ OF WHEN ‘THE VERY PLEASANT GENERATED FEELING BY BEING SALTYDOG OF THOUGHTS INVESTOR PART 2 PATIENCE’* IS WEAPON ‘AN MOST POWERFUL INVESTOR’S from now, nobody canbe sure. couple of weeks. Where they go been asmall recovery in the last been in free-fall, although there has markets around the world have In the last few months stock its conclusion. its upturn, after this corona virus generated crash reaches are now well positioned to make the of most the next navigated three relatively small market corrections, and Since the beginning of 2018, we have successfully economies, and this time it paid in spades. off approach owing to the precariousness of existing world In recent times we have consistently used this crashes that you graph. cansee in the FTSE100 definitely better than experiencing the wealth destroying back at anincreased price. aclever Not result, but unfortunately we canend up selling and then buying it turns that out the correction is asmall one, then We buy into uptrends and sell of out downtrends. If downwards. become the opposite is also true, and the can the greater the momentum upwards becomes. Obviously rise; this in turn attracts more and more investors, and invested into asector fund, or the quicker its value will basicThe idea is that the greater the money being that we also treat cash as asector in its own right. funds which make It up to is our portfolios. important say to as trend investing) sectors to and choose the I.A. use anactive momentum approach (sometimes referred At Investor Saltydog we disagree with this strategy; we SECTOR OR FUND, THE QUICKER ITS VALUE QUICKER THE FUND, SECTOR WILL RISE’ OR INVESTED INTO‘THE A GREATER BEING MONEY THE use. nowhere to go; now you cancreate hydrogen for future of wind solar or created electricity which normally has This process is perfect when there is anoversupply power hydrogen driven car engines. be fed into existing gas installations and also be used to hydrogen canthen be stored for future use, when it can and safely split water into hydrogen and oxygen. The this involves using electrolysis to cheaply, efficiently There is now anew kid the on block called ‘Waterfuel’; biotech and green energy funds leading the charge. shapes and forms will not continue to perform, with I also see noreason why technology funds in all their • • • • • again. using three such funds, and will undoubtedly visit them these areas. At Saltydog, prior to the crash we had been provide return agood for people wishing to invest into mainstream issues, and there are anumber of funds that Sustainability and ethical good governance are now environment. effect, and the desire of many to improve the world’s I do think that it would be amistake to ignore the ‘Greta’ forever.practises have unemployed become thereby changing working depression, but large numbers of people are likely to be living in atime of deflation, inflation a1930’s or style I do not have the knowledge to judge whether we will from where they were at the beginning of 2020. time? economies of The the world will be hugely different the best market returns from come in twelve months next questionThe that needs to be asked is, where will ARE NOW MAINSTREAM ISSUES’ MAINSTREAM NOW ARE ETHICAL GOVERNANCE ‘SUSTAINABILITY GOOD AND Managed (up 25% in 2019). Janus Henderson Institutional Global Responsible (up 25% in 2019). Sustainable FutureLiontrust Managed (up in 2019). 30% Royal London Sustainable World Trust

* Warren Buffett Chairman & Founder Douglas. Best wishes and investing, good weapon is patience’. from the Sage of ‘an Omaha, investor’s powerful most a livelihood, we canwait for the storm to pass –take it of the not luxury With having fishing on to carry to secure equivalent. insecure then take action and go into cash the or stock markets; if they still stormy look and you feel This is not dissimilar so from investing in tomorrow’s you cando nomore. rest The is luck! your knowledge to make the boat and crew safe, then skipper was that if you have taken all the action within sea fishing boat from Hull; the lesson Ilearned from the ofthe story my time the on Kingston Garnet, adeep In the previous Thoughts of Investor, Saltydog Itold you spreading further. by this fuel, and one cannot imagine this process not already anIsland in the Orkneys that is entirely powered of water electricity or to power the process. There is This is really green and you are not going to run out

33 DIY Investor Magazine Magazine Investor DIY 2020 Apr | DIY Investor Magazine | Apr 2020 34 volatility. against sharp market falls are or set up to profit from absolute terms are those which had built-in protection limited impact; the trusts which have done best in trusts, equity For sector and stock selection has had TOABOUT HOW AFTERMATH’ THE INVEST IN WE CAN WHETHER ASK DRAW ANY CONCLUSIONS CERTAIN‘WHY TRUSTS HAVE AND OUTPERFORMED, has been brutal and indiscriminate.sell-off pandemic in and the Europe US clearer; became the it fell after in the Q1 likely 23.8% 2020 scale of the suffered 100 its worst fall since FTSE The 1987 when invest in the aftermath. ask whether we candraw any conclusions about how to to at why look trusts certain have outperformed, and saw one of their worst ever quarters. It is moment agood developed world is in ‘lockdown’ after markets equity we have seen the end of the first act; of most the coronaThe virus pandemic is far from over, but perhaps MARKET HISTORY STOCK IN QUARTERS WORST THE OF ONE manager fund hedge Spitznagel, Mark in thesmart next one. It just doesn’t work this way.’ – all figured out, retrospectively, and so we think we’re so playbook in this crisis. We think we had the last crisis luck‘Good to anyone that just tries to copy an old writes McMahon Thomas future for the market when the virus is beaten outperformance ofThe technology hints at anexciting possible REVOLUTION THE OF CHILDREN expected to do well in the crash. just ten stocks, all long, and wouldn’t so have been Pershing Square, cash, waiting for abetter time to buy equities. Steve Russell have been picking up gold miners and result of the In sell-off. addition Duncan MacInnes and position, the largest in the fund, returned as a 100% returns in theadding sell-off, 3.5% to its NAV; its CDS InvestmentRuffer Company also generated positive volatility fund and the other asset classes invested in. rates paying portfolios and major off contributions by the just enjoyed the best first quarter in its history, with its masterthe same fund into feeds; which BHMG it has is amore diversifiedBHGG fund with anallocation to direction. market for tradeslook with asymmetric payoffs, irrespective of market, the or pandemic, to profit from the volatility; they traders do not need to hold aparticular view the on payoffs, with minimal downside and huge upside. BH Howard and his team for trades look with option-like currencies) trading by agroup of star traders; Alan focuses fundamentallyBHMG rates on (bonds and 17.2%.and BHGG fell 24.7% but NAV BHMG’s rose anastonishing 25%, between 21th All Share and February 27th March, FTSE Brevan Howard Macro (BHMG) Global and BH (BHGG) investment in the universe trust performers wereStar the listed vehicle of Bill Ackman owns ; including reopening a position in Starbucks. in position a reopening including will note he has started buying more of his portfolio, languishing awide on discount to NAV, and optimists term track record is exceptional, with the share price fell 19.2%; 500 was as the up Bill’s S&P 3.9% long- 18thBetween and February 31st March the trust’s NAV book. equity the major which sell-off, made back any the losses on However, it had astutely built positions up CDS prior to Mortgage ofloss 21.6% and aworst of -31.6%. Even Scottish European Growth, down 17.4% against asector average best-performingThe Europe AIC trust was Baillie Gifford 25%, and the worst of -31%. positions, which compares to asector average decline of NAV was down just 19.8% when adjusted for its unlisted Growth’s US America sector, North In AIC Gifford Baillie of -40.7%. performance compared to anaverage and aworst of loss 35.6% Growth Gifford UK relatively well; All Companies UK in sector, AIC Bailie Trusts run by Baillie Gifford in particular have done down just in 6% the sell-off. communications sectors; for Amazon, example, was which often appear in the consumer discretionary or did internet retailers providers other online and service Technology indices themselves outperformed, but so done better in this crisis. However, trusts with high weightings to technology have the market, making them considered growth stocks. successful stocks trade higher on multiples than Technology is often thought of as being a‘risk-on’; technology, may have implications for the future. patterns, such as the defensive performance of have had atorrid time; however, interesting some In more ‘vanilla’ funds, equity even the best performers IMPACT –TECHNOLOGY’S EVERYTHING OF INTERNET THE gearing, was arelative in outperformer Global its AIC HAVE DONE BETTER IN THIS CRISIS’ HAVE THIS IN BETTER DONE TO TECHNOLOGY ‘TRUSTS WEIGHTINGS WITH HIGH , which entered the crisis month with 8% massively outperformed, down 26.1%

returns in the crisis the in returns of the themes built into helped the portfolio relative 16.3% in the drawdown; its managers told us that many relatively strong Global, in performer AIC down just is amajorAmazon holding in Mid (MWY) Wynd Alibaba. peer combination. It is in astrong position; as is its Chinese growth consumer discretionary the on upside, apotent consumer staples company the on downside and ahigh Accordingly, is behaving Amazon like adefensive life.normal testing kits to citizens, possibly the ticket back to a sphere that is the handing UK it the task of delivering essentials to the self-isolating; it is dominant so in this such have as Amazon shifted their to network provide isSecond the impressive way that logistics businesses users? a day the on train, will or et Zoom al retain many new people, and the online economy will be key; four hours There will be apermanent change of lifestyle for many back to lugging shopping bags the on bus. home less likely to shop online before, but are unlikely to go are the aged told to self-isolate; they would have been have who Those discovered online groceries shopping surged and in our view, there is nogoing back. meeting, chat and services ordering systems have learning, online lockdown; during running society Firstly, the online economy has been critical in keeping Tech has tech been defensive main for reasons. two peer group loss. estimated of loss 18%, favourable to the 19.1% average sector; adjusting unlisted its 20% positions gets to an BE KEY’BE WILL ECONOMY ONLINE THE AND MANYFOR PEOPLE, LIFESTYLE OF CHANGE PERMANENT A BE WILL ‘THERE

, another

35 DIY Investor Magazine Magazine Investor DIY 2020 Apr | DIY Investor Magazine | Apr 2020 36 29.8% loss and loss the29.8% worst -55.7%. (downIncome &Growth 19.7%); sector average was a and Income (downFinsbury Growth 18%) and Troy Equity topIn UK Income the have performers two been structurallycould become lower. online,shift demand for energy raw and certain materials air travel, greater focus domestic on supply chains and a the Saudis and Russia; if the outcome of this crisis is less manufacturing and the coincidental price war between Energy and materials suffer from the shutdown in as utilities deserving of greater state interference. we suggest they may take another step to being viewed margins and aninevitable spike loans; in non-performing Banks suffer from lower interest rates hitting their HIT’ HARD MATERIAL AND ENERGY HAVE PARTICULARLY BEEN ‘TRADITIONAL VALUE FINANCIALS, SECTORS OF hard hit. financials, energy and material have been particularly exposure to the value style; traditional value sectors of Another key reason behind relative performance is VALUE OF CONTINUES UNDERPERFORMANCE –THE CHEAPER AND CHEAPER paid the trust off; lost just 14% in the drawdown. and low quality and low credit rated names which all stockseconomy’ such as oil and gas exposed stocks It also benefitted from having in ‘old book ashort Salesforce. Alphabet, , Alibaba, Facebook, Tencent and are alist of technology winners from the crisis -Amazon, both key factors discussed sofar. Its top seven stocks Manchester &London (MNL), which has benefitted from Top Global in performer AIC sector has been sector returns to previous levels, if ever. We believe it is likely to time be some before the travel Fundsmith Emerging Equities Emerging Fundsmith Schroder Asia Pacific in Asia Creditable have performers Pacific been Witan and the developed world –albeit still in the mid-teens. drawdown in this period has been much better than in Being earlier into the pandemic than the West, energy, materials and financials. distributed online, and away from the value sectors of tech businesses and consumer and business services trends same The have –favouring been important high underweight to India. markets, the key has been to be overweight to China and exposure to domestics. UK In Asia and emerging exposure, the geared most and those with greater stocks; worst were performers those with greater value revenue streams and have arelatively low tilt to value trustsThese hold high quality companies with defensive exposure to internet and tech. Markets its highly defensive and Emerging JPMorgan portfolio We ways see two forward: remains with uncertain different investment implications. this will be felt in the stock market. However, much Technology will more become central to our lives and and major industry. trade relations local, and regulatory interference in banks trends ,such of as the the shift economy online, keeping We think this crisis will strengthen pre-existing certain PLACE? THIS OF OUT GET WE DO HOW outperformed, with low gearing and high ; in emerging markets, has done well thanks to higher than its interest payments. harder it is for the government to make rise nominal GDP potential permanent growth losses become and GDP the We think the longer the lockdown lasts, the more likely government loans go bust. governmentUK debt increases as firms taking lasting for years as consumers remain frightened. Restaurants and bars are less frequented, with this trend exhaust government schemes before going under. Lockdown lasts for months, and more businesses virus. the from immunity In apessimistic scenario, tests show that few of us have SCENARIO 2) PESSIMISTIC route (as out and the Napoleonic Wars). it did after 2008 limited and the government could take the ‘austerity’ riseThe government in UK debt would be relatively limited. government interference in the banking sector could be with energy and materials exposures, and our feared There could also be aquick bounce backs in trusts managed. be had started to pick up as the outcome seemed likelier to heading thanks into to concerns 2020, around Brexit, but domestics later in the year; these companies were cheap There term could be rally ashort in trusts exposed to UK of defaults and business closures is limited. retail and leisure sectors return to business; the number Restrictions movement on begins to be lifted in May, and virus grows, the fatality rate declines. In the optimistic scenario, as our understanding of the SCENARIO 1) OPTIMISTIC OUTLOOK

VISIT the longer term; bonds would finally meet their nemesis. outperform, but may well do in so either scenario over Trusts with higher technology weightings would while banks and energy companies struggle. underperformanceThe of value would be exacerbated, savers would suffer. state (as it did after the second world war) and cash Inflation would then likely the seem only way for out the CLICK HERE TO RECEIVE DIY INVESTOR INVESTOR DIY TO RECEIVE HERE CLICK MAKE SURE YOU DON’T MISS AN ISSUE; ISSUE; AN MISS YOU DON’T SURE MAKE

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37 DIY Investor Magazine Magazine Investor DIY 2020 Apr | 39 DIY Investor Magazine | Apr 2020 – Founder of Templeton, Galbraith Galbraith – Founder Templeton, of - talking about 1929 in his book ‘A short book ‘A his in 1929 about - talking – Founder of Ned Davis Research Ned Davis of – Founder Maintain the emotional stability to act diametrically diametrically act to stability emotional the Maintain masses. the to opposite when buy to crowd the with part company to difficult is It be must what precisely is that but bearish is everyone returns superior produce to done Ned Davis their can keep that those are investors The best check. loss in to reactions emotional James ‘Value GMO of Montier at author and – Strategist Investing’ capitalism that crisis enduring and The most extreme of discovery eventual the experienced…..and ever had once those for deficiencies moral and mental severe the genius. with endowed thought Galbraith JK Euphoria’ financial of history sold 3.9m were whereas shares that reflect to Interesting yesterday; 3.9m bought shares were there yesterday, intelligent more be may purchasers the possibly and than the sellers. Templeton Sir John & Hansberger get will strong the that a consensus is there now Right prove likely will This recession. this through stronger any wary paying be of should one However, accurate. strength. this for price normality will, it as normal, to returns When life a strong to stick to a time is This return. also will discipline a valuation balances which philosophy focus. sheet balance and flow cash alongside we but on, brakes the slammed have may virus Corona car! the abandon to a reason as this see not should – Founder of Brandes Investment Investment Brandes of – Founder EVERYBEAR MARKET DISTINGUISHING HAS OWN ITS FEATURES THIS– TIME THE AND CAUSE SPEED ARE, OF THE FALLS FAR, SO THE UNIQUE ROBERTSON – WRITES FEATURES DALE their of midst the in be will investors and readers Many and shocked be may and market bear proper first falls. market of severity and speed the by unsettled I outsourced leave, 2002In on gardening I was when the to went and qualified someone better to garden the part 50 best the of or so investment I read where library classics. the them of many books, often. these to refer and quotes and notes liberal I took that comfort know to great is it stress, market of times At hold you everything common question perfectly to is it some are here notes, my through flicking As I was dear! They moment. the at value particular hold which quotes and time-honoured principles following that illustrate the even through rewards long-term can reap practices most challenging of times. depressed of periods for wait should ‘The investor representative buy to levels market and business acquire to able be to unlikely is he since common stocks, future the which prices at except times other at them regret’ him cause may and Benjamin investor Graham – Legendary (1934) Investor’ ‘The of author Intelligent value to stick to discipline of deal a great takes It declines price share the when especially convictions, price, on share only focus you If them. buy you after For long- emotionally. devastating can be declines price business to relative price who evaluate investors term tremendous can represent declines price value, opportunities BrandesCharles Partners they if comfortable owning be you’d a stock own Only tomorrow. years three for exchange stock the closed and Warren Buffett investor most famous – The world’s Hathaway. Berkshire of founder H030353/0717 H030353/0717

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INVESTING IN IN IN INVESTING INVESTING you achieve achieve you exists to help to help exists long-term long-term your ­ goals. nancial ­ Janus Henderson Henderson Janus Limited, Henderson Global Investors (Brand Management) Sarl and Janus International Holding LLC. Management) Sarl and Janus International Holding LLC. (Brand Henderson Global Investors Limited, 2606646), Gartmore Investment Limited (reg. no. 1508030), (each incorporated and registered in England and Wales with registered oŒ ce at 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the by regulated and authorised are 3AE) EC2M London Bishopsgate, 201 at ce oŒ registered with Wales and England in registered and incorporated (each 1508030), no. (reg. Group Limited HGI Investment includes Gartmore Investors 2606646), Henderson Janus name The Investors. Henderson Janus 2017, © monitored. and recorded be may calls Telephone services. and products investment provide to Authority Conduct Financial Issued Issued in in the the UK UK by by Janus Janus Henderson Henderson Investors. Investors. Janus Janus Henderson Henderson Investors Investors is is the the name name the by under under regulated and authorised which which are 3AE) EC2M Janus Janus Henderson Henderson London Bishopsgate, 201 Investment Investment Capital Capital at ce Funds Funds International International Limited Limited Limited Limited (reg. (reg. no. no. (reg (reg 2678531), 2678531), no. no. Henderson Henderson 3594615), 3594615), Investment Investment Henderson Henderson Management Management Global Global Limited Limited Investors Investors (reg. (reg. no. no. oŒ Limited Limited 1795354), 1795354), registered AlphaGen AlphaGen with (reg. (reg. Capital Capital Wales and no. no. England in Limited Limited 906355), 906355), registered and (reg. (reg. incorporated (each no. no. 1508030), 962757), 962757), Henderson Henderson no. (reg. Group Equity Equity Limited HGI Investment includes Gartmore Partners Partners Investors 2606646), Henderson Limited Limited Janus name (reg. (reg. The no. no. Investors. Henderson Janus 2017, © monitored. and recorded be may calls Telephone services. and products investment provide to Authority Conduct Financial Management) Sarl and Janus International Holding LLC. (Brand Henderson Global Investors Limited, DIY Investor Magazine | Apr 2020 40 prefer to access this income via adividend paying not buying comfortable Those individual shares may of annual profit, reinvesting the rest into the business. payout ratios, meaning they only distribute to 50% 40% reliably return profits to shareholders with safe dividend Dividend paying shares: Shares in companies that ‘buckets’ of assets: Income investors will typically create three major PORTFOLIO INCOME AN FOR INVESTMENTS OF TYPES years, never whereas virtually 3% did. the market crashes, 5% canrun you of out money in 20 year; it is based academic on research showing that if take more than 4% of the value of each out your portfolio retirement; to avoid running of out money you should not ‘4%The rule’ is arule of thumb for income investors in the pursuit of passive income. are fuelling asurge of interest in income investing and investor to fund their everyday living costs; investors DIY capital growth, of most this income is paid to out the Unlike strategies for long term wealth accumulation and highest possible annual income with the lowest risk. bonds, mutual funds, -that and property generate the Income investing is the accumulation of assets -shares, WHAT IS INCOME INVESTING dangers they might face. assets might be appropriate and the common most Here we take acloser at income look investing; which recession. far less predictable, with many bracing for aglobal current COVID-19 crisis makes the future suddenly look almost impossible not to pick winners; however, the during year bull the twenty market found as some it Income investing had been of out fashion with investors incomeon investing -writes Christian Leeming than growingimportant richer? If so, you need to focus your bills and having enough income to live more on youDo need to your generate portfolio cash? Is paying INVESTING BASICS: INCOME INVESTING 101 unique set of risks for the unwary income investor: However bonds are not without risk and candeliver a have abetter chance of recouping your investment. limited than equities but in the event of bankruptcy, you as they fluctuate less than stocks; potential profit is more Bonds are often the cornerstone of anincome portfolio WHAT AVOID OR BONDS: FOR, TO LOOK IN duration of the loan. – anagreed return the on money you lend them for the government and savings bonds all deliver ‘fixed income’ Bonds • • • • • What to for in look dividend stocks: mutual fund investment or trust. payers at their historical performance to identify reliable contemplatingWhen funds investment or trusts, look stock. risky on punting Income investing is about protecting your money not recession. than-average business likely to keep paying in a with little nocorporate or (ROE) debt is abetter- A company that achieves high return equity on businesses with little growth potential. friendly management, particularly in mature A track record of increasing dividends –shareholder- paying per 60p/£1.80 share. of and –acompany between 6% 2% valued at £30 the past three years, and aim for adividend yield Companies with positive earnings and nolosses for : There are many of bonds types -corporate, stocks has always beaten property. and aninflation-adjusted on basis, the long-term growth in often; market if the property tanks, the is loss amplified, owning shares and bonds, treatment and its tax changes Direct investing property is generally more ‘hands on’ than with cheap mortgage money? appreciating asset; so, why not invest in property 100% it,a loan on you have aleveraged position agenerally on If you use your capital as adeposit and raise aproperty on inflation. will itself generally keep pace with property a assets, whereas inflation erodes the ‘real’ returns your on other increase your withdrawal rate from because your portfolio If you are using comfortable debt you can dramatically ADVANTAGETHE INVESTING: PROPERTY OF but canfind aplace in awell-built investment portfolio Each option with advantages comes and disadvantages, that invests in property? through aReal Estate Investment Trust –acompany –REIT Property: • • • • • should be 60%. of should your portfolio be30% in bonds; it at 60, Another rule of thumb, is the ‘age-old rule’. Aged 30, currencies.understand Generally avoid foreign bonds unless you really in interest rates. years that arein more vulnerable than 5-8 to changes Beware ‘duration risk’; don’t choose bonds that mature A better choice for investor the DIY may be bond funds. all costs. siren call of unregulated ‘mini bonds’ -to be avoided at rare; have some been tempted, and devastated, by the been popular investors with DIY but issuance has been Retail Bonds exchange issued the on LSE’s ORB have Do you Do want to outright buy aproperty invest or giving. your should income that portfolio be the gift keeps on to remain disciplined as so not to eat away at your capital, back;comes the key is not to panic, and if you canmanage those losses canremain uncrystallised until the market longAs as you don’t need instant access to your cash, decline –yet markets have always back. come Tuesday dived by 12.2%, when the FTSE still it’s biggest and many will remember Black Monday even –or blacker recall the Global Financial Crisis and the Dotcom Bubble, However, as we know, it’s amarathon not asprint; will most gave up 35% of its value in just over amonth. paper declines 100 because of the the recent FTSE sell-off; A large number will of income portfolios be showing hefty may vulnerable. at be their most theon income investor’s quality of life at atime when they any error missed or could have opportunity adirect bearing of theseNone decisions are to be taken lightly because practice to schedule aregular review. portfolio be gamey enough to keep you awake at night, it is good over time, and whilst should anincome portfolio never circumstances and preferences; these are likely to change thenAnd adjust it according to your personal 1/3 of assets in property 1/3 of assets in bonds and/or bond funds. 1/3 of assets in dividend-paying stocks. with: simplestThe income investing allocation would be start not you cantolerate alot of volatility. your personal preferences, risk tolerance, and whether or This is where it gets personal; asset allocation is down to PORTFOLIO INVESTING ALLOCATION INCOME AN IN ASSET score. credit your outgoings, debt, and influences such as your health and of emergency. precise The amount will depend your on month, it is vital to have enough available savings in case with adiversified generating portfolio lots of cash each Saving money and investing money are different; very even PORTFOLIO INVESTING INCOME AN SAVING OF IN ROLE THE DIY Investor Magazine | Apr 2020 42 impact of COVID-19 is now behind us. are still falling, the bulk of the adjustment due to the initial global basis was during and mid-March while estimates We note however the peak of the downgrades a on measures implemented to slow the spread of COVID-19. of the disruption caused by the public health control There is nodebate now about the potential significance month to mid-April. have fallen2020 by anextraordinary 19% in just asingle Across the globe, consensus earnings forecasts for Investors wait for news the on lifting of lockdowns Source: Refinitiv, Edison calculations. Unweighted revision index shown. index revision Unweighted calculations. Edison Refinitiv, Source: forecasts earnings consensus 1: Exhibit in respect of the duration of the impact of COVID-19. chase the market now as significant remains uncertainty notably oversold shares has shortened and we would not Given the rapidity of the rebound since then, the list of overweight position was appropriate in equities. infection rates. week Last we suggested amodestly quarter, in addition to continued reductions in daily incoming news the on lifting of lockdowns during this Key to any sustained improvement in sentiment will be US’ BEHIND IMPACT NOW COVID-19 OF IS TO DUE ADJUSTMENT INITIAL ‘THE THE BULK OF CONSENSUS EARNINGS ESTIMATES IN POINT FIRST INFLECTION THE PASTGLOBAL PERSPECTIVES: Consenus catches up to Consenus COVID-19: 2020 Chief Investment Strategist George Alastair income statements and balance sheets. impact of COVID-19 has progressed through company will be worse than currently indicated, once the full It is likely in our view that the reported figures for 2020 exceptional losses non-recurring or items. Consensus forecasts are not designed to capture should forward P/E valuations be over-emphasised. projected growth at this EPS stage however, and nor We would caution against reading too much into compared to earlier expectations for rise. a6% and now anticipate a15% profits decline in 2020, Continental European earnings have been downgraded crisis. downgraded global financial by the since most the 2008 In the intervening period, 2-month forecasts have been becoming apandemic. amongst analysts in terms of the risks of COVID-19 forecasts appeared to show near-total complacency In mid-February, we observed that consensus earnings We return our global view equity to neutral. 5 professional prior to committing to any investment. This advert has been approved as a financial promotion under s21 of the Financial Services and Markets Act 2000 by RM CapitalLimited. byRM 2000 Act Markets and Services theFinancial of s21 under promotion financial a as approved been has advert are This investment. risks specific investment any fund qualified the suitably to of a details from committing advice Full guaranteed.obtain to not to is recommended prior strongly and is objective professional investor website.an Any company is the target on yield available down.The Documents Limitedis as Information Keyand well Markets the as returns and Capital up future Prospectus go fund to 7JA.RM can the guide in them a available from EH3 not income is the performance and Edinburgh Past shares Limited. 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43 DIY Investor Magazine Magazine Investor DIY 2020 Apr | DIY Investor Magazine | Apr 2020 44 will increasingly become likely. duringnormality Q2, asecond or wave of downgrades see substantial progress towards areturn to economic to current levels, investors and analysts will need to Nevertheless, if earnings forecasts are to stabilise close VERYHAS BEEN SIGNIFICANT’ LOWS THE MARCH OF SINCE ‘THE MARKET REBOUND implement aquarantine. magnitude as the decision to shut the economy to thought April), 6th on this risk is not of the same (anduncertain several weeks longer than we previously While the timing of the release of lockdowns remains implement lockdowns –have been resolved. uncertainties –such as whether not or countries would in particular should to diminish start as the biggest has now passed through global markets and volatility We believe the first wave of the impact of COVID-19 financial markets over period. the same has corresponded well to the timing of the rebound in albeit still large avery figure by normal standards. This Now, the rate of decline has moderated to 1% per week, forecasts were being cut by close to 5% per week. peaked of March, around the 20th at which point global surgeThe in cuts to analysts’ forecasts appears to have direction. which gives more information for the short-term market However, it is the rate of change of consensus forecasts shown. index revision Unweighted calculations. Edison Refinitiv, Source: March downgrades Global 2: have mid- peaking after eased Exhibit lockdowns are eased. the speed of recovery of private sector demand once in respectuncertainty of the duration of lockdowns and cycle averages but this is balanced by still-outstanding Current valuation levels remain significantly lower than neutral position global on markets. substantial recovery from the lows we back shift to a globalWith and equity credit markets now showing a sheets. tolerable levels of damage to government balance levels of economic harm to those not infected –and of tolerable levels of future infection against tolerable nations, governments will have adifficult balance 3-way the peakWith in infection rates now visible in many COVID-19. and fiscalmonetary stimulus to the offset impact of fast-deteriorating fundamentals and anenormous Investors are in many respects caught in aduel between move only last week. sinceto then –and 30% by 10% since our overweight significantvery however, markets with US rising by close marketThe rebound since the lows of March has been modestly overweight in early April. toJanuary neutral in the second half of March and then shifted from acautious position markets equity on in In terms of our strategic views, we have progressively CLICK HERE TO RECEIVE DIY INVESTOR INVESTOR DIY TO RECEIVE HERE CLICK MAKE SURE YOU DON’T MISS AN ISSUE; ISSUE; AN MISS YOU DON’T SURE MAKE MAGAZINE TO YOUR INBOX MAGAZINE SUBSCRIBE THROUGH EDUCATIONTHROUGH investing and to help those that pay for professional financial advice to understand the to understand advice financial that pay for professional those to help and investing In addition to creating a community around retail bonds, Retail Bond Expert produces produces Expert Bond Retail bonds, retail around acommunity to creating addition In Launched in November 2012 Retail Bond Expert is the UK’s leading portal dedicated dedicated portal UK’s the leading is 2012 November in Expert Launched Bond Retail educate the investor – self-directed or wealth manager – and inform them of product of product them inform –and manager wealth or investor the –self-directed educate RETAILBONDEXPERT.COM to retail bonds with the remit to inform experienced investors, educate those new to those educate investors, experienced to inform remit the with bonds to retail and hosts a series of micro sites that sit above existing communities designed to designed communities above existing that sit sites of micro aseries hosts and BECOME AN EXPERT nature of the products in which they invested. are which in nature products of the launches in a comprehensive and timely fashion. timely and acomprehensive in launches

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