Investing in stocks and shares is the best reward for the patient. It’s a saying that most fund managers adhere to, regardless of which stock markets they are trying to make money on.
In recent days, I spoke with two highly regarded managers who passionately believe that patience is one of the key ingredients for successful investing. They are Richard Penny, from Crux Asset Management, and Sam Vecht, from the global investment giant BlackRock.
The two managers manage money in different markets: chalk and cheese. Penny, who believes that “time is our friend”, has been managing investment portfolios in the UK for the last 24 years, at M&G, Legal & General and since late 2018 at Crux. The main investment fund she runs there is UK Special Situations, a £197m vehicle that invests across the stock market in search of returns.
It means an eclectic portfolio spanning companies such as Shell and Barclays, as well as more interesting stocks such as Alternative Investment Market (AIM)-listed leisure company XP Factory and fintech specialist FD Technologies.
Meanwhile, Vecht is one of three managers with a hand at the helm of BlackRock Frontiers, a £270m investment trust listed on the UK stock market.
Time is our friend: patience is one of the key ingredients for a successful investment
It invests in listed companies operating in some of the world’s most embryonic economies (in many cases, countries that have not yet achieved emerging market status). Its largest country holdings are in Saudi Arabia, Indonesia and Thailand.
Penny says running an investment fund in the UK, which owns a large dose of small and medium-sized businesses, has been a challenge in recent years. Investors have been net sellers of the market, depressing stock prices, especially among small and mid-cap companies.
But his view is that at some point the tide will turn and, when it does, the share prices of many stocks outside the FTSE 100 will recover spectacularly. If so, your patience (and that of your fund’s investors) during difficult times will be rewarded.
It’s happened before, he says. For example, between March 2020 (the start of lockdown) and early January last year, her fund returned 151 per cent, compared to 76 per cent for its peer group average.
After the 2008 financial crisis, the fund he ran at the time (L&G UK Alpha) also performed better over the next two years, returning 173 per cent, compared to its rivals’ average of 85 per cent. Although the past is no indication of the future, Penny says the growth potential over the next 18 months to three years is tremendous, with triple-figure returns possible.
BlackRock Frontiers’ Vecht says investing in everything from lithium mining companies in South America to casino operators in Cambodia is not without risk. But thanks to diligent on-the-ground research (he lives his life out of a suitcase), it has been possible to build a portfolio that will provide patient investors with attractive returns in the medium and long term.
Patience, along with diversification, is one of the keys to making money with stocks.
Bank branches can thrive and Penrith is proof!
Reader Robert Wilson has just returned from a splendid holiday in Keswick, Cumbria. While he was impressed by some of the Lake District’s scenery, the 76-year-old former local newspaper editor was also taken aback by the vibrancy of Penrith’s nearby high street, above.
While in the town he counted at least eight banks and building societies competing for the custom of locals and other passers-by. These included local financial institutions such as Cumberland and Penrith building societies, as well as major banks HSBC, Lloyds and NatWest.
Robert, from Newarthill in Lanarkshire, says it was encouraging to see so many banks on the town’s high street, given the large-scale closures of branches in recent years (1,150 and rising).
Vibrant: Eight banks and building societies compete for the custom of locals and other passers-by in Penrith
“I was pleasantly surprised,” he told me last week. ‘I expected to see the odd branch with a ‘for sale’ or ‘for rent’ sign outside. But none of that. Now it is being asked whether it is the most bank- and building society-friendly city in the UK.
Last month, another reader (Peter Rowlands) was similarly overwhelmed by the number of bank branches he found in the North Wales seaside resort of Llandudno. So, a challenge, dear readers. Is his city still a hotspot for banks and building societies? If so, write to me at email@example.com. Then I will come to visit you and your city.
Joan’s right to want the best service.
Many thanks to Joan White, 85, for contacting me about the article I wrote seven days ago about bank branch staff increasingly instructing customers to use machines rather than counter services.
Joan, from Waltham in Lincolnshire, says she went to her local branch on two occasions recently to deposit checks but was told to use a cash deposit machine.
Human touch: Bank branch staff are increasingly instructing customers to use machines instead of counter services.
She was so angry that Joan has now started using her local Nationwide Building Society branch when she wants to deposit a cheque. Her service remains personal. A human touch like that still goes a long way, especially when machines don’t recognize deposits, as happened at NatWest a few days ago.
One last thought. If you work at a bank branch where you are instructed to discourage customers from using teller services, we would love to hear from you.
Nationwide’s halo could shine brighter
Although Nationwide Building Society does many things very well (customer service, for example), its halo does not shine as brightly as it could.
For an organization that has both the financial muscle and the street presence to compete with banks for their money, it has gaps in its arsenal that need to be filled.
You don’t have instant access to the cash Isa, a basic financial product. Customers who want a cash Isa should opt for a fixed rate offer or a restricted access account that can only be managed online. It also does not offer commercial banking, a problem for many small businesses when the society is the only financial institution left in town.
If I were a professor and Nationwide my student, I would sign your end-of-semester report with the words: “I could do better, much better.”
A big thank you
Speaking of the Lake District, many thanks to Margaret Dawson, who helped me out of a jam eight days ago, not once but twice. Firstly, she kindly offered me and two other travelers a lift to Windermere when our connecting train from Oxenholme was cancelled.
After the generous Margaret dropped us off at Windermere, I went to Wanslea Guest House in Ambleside and discovered that she had left some important documents in the boot of her car which had escaped from my backpack.
Without fear. Margaret soon emailed me, as she found my address among the papers. After half an hour, she appeared with my fragments.
“What goes around comes around,” she said, thanking me for the anthurium plant I had bought her as a thank you at the garden center across the street from my B&B. Do unto others as you would have them do unto you.
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