With small-caps on the up, The Telegraph is backing North Atlantic Smaller Cos. manager, Christopher Mills, to keep outperforming, while MoneyWeek believes healthcare REITS, Assura and Primary Health Properties, could be beneficiaries of the new UK government.
With small-caps on the up, The Telegraph is backing North Atlantic Smaller Cos. manager, Christopher Mills, to keep outperforming, while MoneyWeek believes healthcare REITS, Assura and Primary Health Properties, could be beneficiaries of the new UK government.
By Frank Buhagiar 28 Aug, 2024
Questor: This Fund Manager Has Returned 13pc a Year for 42 Years – Now is a Good Time to Buy
In 1982, Christopher Mills, founder of investment group Harwood Capital, became manager of the North Atlantic Smaller Companies Trust (NAS). 42 years on and the £555 million investment trust, which remains under Mills’ stewardship, has consistently outperformed the UK stock market, generating an annualised +13% return compared to the FTSE All-Share’s +8.9%. Over ten years, NAS’ total return of +147.5%, comfortably ahead of the Deutsche Numis Smaller Companies index’s +61.2%.
That successful track record, testament to the fund’s Anglo-American approach to investing in small-cap stocks, although currently only around 10% of the fund is invested in U.S. businesses while over 75% is in UK stocks. It’s also a nod to NAS’ activist strategy whereby the fund manager doesn’t just buy and hold sizeable stakes in companies, but also helps management teams transform/turnaround their businesses. And yet despite that track record, the shares currently trade at a 29% discount to net assets – a battle scar of the tough time small-cap funds in general have had these past three years or so, as the high inflation/interest rate environment put investors off the sector.
But things could well be looking up for both small caps and NAS itself. Small-cap indices are showing signs of life as interest rates come down; while NAS’ share price is up 10% over the past 12 months. All in all, Questor sees enough to slap a buy rating on NAS stock. And, it seems, The Telegraph tipster is not alone “we take comfort that Peter Spiller, the manager of Capital Gearing Trust, a longstanding Questor tip, is a big fan. Mr Spiller, who pips Mills to the post as the UK’s longest-serving fund manager, holds him in high regard and owns 6.8pc of North Atlantic. With small companies rallying on a strengthening UK economy, that’s a powerful endorsement.” Safety in numbers and all that.
MoneyWeek: Top Healthcare REITs for Your Portfolio MoneyWeek has come up with two names in the Real Estate Investment Trust (REIT) space that stand to benefit from the change in government in the UK – Assura (AGR) and Primary Health Properties (PHP).
Fair to say the two trusts have quite a bit in common. Both are focused on building, managing and leasing healthcare facilities, such as GP practices and hospitals. Both primarily rent out their facilities to the NHS, meaning their tenant base is largely government-backed – currently 89% of PHP’s income is paid for by the UK and Irish governments. Both operate in a sector where underlying demand for the facilities they provide is being driven by an ageing population. And both stand to benefit from new Chancellor Rachel Reeves’ decision to scrap the previous plan to build 40 new hospitals across the UK – with NHS waiting lists at record levels “private providers are likely to have to step in to fill the gap.”
Of the two, MoneyWeek thinks that “Assura looks to be the better buy. The stock is trading at around 80% of book value and has an 8.2% forward dividend yield. PHP is around 10% more expensive on a book-value basis and only offers a forward dividend yield of 7.4%.” Nevertheless “both Assura and PHP look well placed to benefit from Labour’s drive to increase investment in the UK economy and improve access to healthcare. A portfolio of both would provide exposure to these themes while reducing company-specific risk.” And if that’s not enough “With interest rates heading lower, these companies may start to look much more attractive from an income perspective.”
3 reliable dividend-paying trusts to consider for a Stocks and Shares ISA
Story by Mark David Hartley
The Motley Fool
Dividends are a great way to build compounding returns in a Stocks and Shares ISA. With tons of reliable investment trusts in Britain, it’s easy to find those that pay regular and reliable dividends.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
Investment trusts offer instant a to a highly diversified portfolio of stocks, often across various industries and regions. Since professionals manage them, the returns are usually reliable — although they typically incur a small fee of around 1%.
Value in the City
City of London Investment Trust (LSE: CTY) is considered the number one dividend hero by The Association of Investment Companies. It’s been paying an increasing dividend for 58 consecutive years.
It holds assets across eight European countries with a heavy weighting towards UK stocks. This means it risks losses if the UK economy declines. While the yield of 4.7% is far from the highest in the UK, its track record is reliable. When aiming for long-term passive income, I like this type of stock. I can set it up with a dividend reinvestment plan (DRIP) and leave it to grow.
The price increased 188% since 1994, equating to an annualised return of 3.6% a year. That’s below the FTSE 100 average but is normal for stocks that deliver value via dividends.
The property play
The property play UK real estate has become a core focus of my investing strategy since the Labour Party took power. Just how effective its new housing policies will be remains to be seen – but I’m optimistic.
Value and Indexed Property Income Trust (LSE: VIP) invests in high-yielding but less popular sectors of UK commercial property. It boasts an attractive 6.8% yield and has been increasing its dividend for 37 consecutive years.
UK real estate has become a core focus of my investing strategy since the Labour Party took power. Just how effective its new housing policies will be remains to be seen – but I’m optimistic.
The five-year dividend growth rate’s small, at only 2.27%, but payments are reliable and consistent. And with the price up 28% in 10 years, its annualised return’s 2.5%. However, this growth’s largely cancelled out by the higher-than-average ongoing charge of 1.88%.
Investing in property-related trusts can be risky though. If a global crisis sends the economy into freefall, real estate could be hit hard. This is reflected in the trust’s volatile price, falling sharply in 2008 and 2020.
The banker’s choice
With a 4.83% yield, JPMorgan Claverhouse (LSE: JCH) is another investment trust with a great track record. Its dividend has increased for 51 consecutive years, with a five-year growth rate of 4.64%.
This trust also holds some of the top stocks on the FTSE 100, including Shell, AstraZeneca and HSBC. It’s similar to, and could be considered as an alternative to, the City of London. The yield’s slightly higher but with a bit less growth over the past 30 years. It’s up 120% in three decades, delivering an annualised return of 2.7%.
It has a low-risk gearing range of between 0 and 20%, currently at 8%. Still, with a focus mainly on UK stocks, it’s at risk of losses if the local economy falters. It also has an ongoing charge of 0.7%, which eats into profits.
£££££££££££
If u want to buy any of the above for your Snowball but still want to earn a blended yield of 7% per year, u would have to pair trade them with a higher yielder.
The Board of Directors of the Company has declared an interim dividend of 1.89 pence per share for the three-month period to 30 June 2024. The dividend will be paid on 3 October 2024 to shareholders on the register as at 6 September 2024. The ex-dividend date is 5 September 2024.
The dividend declared of 1.89 pence per share represents a 2.00p equivalent dividend adjusted to reflect the reduction to NAV as a consequence to the B-Shares issued to shareholders on 19 April 2024 and redeemed on 25 April 2024.
The Board notes that, as previously described, changes to the portfolio composition as debt positions are repaid or restructured are resulting in materially lower levels of income at a portfolio level which will be reflected in what is likely to be a substantial reduction in the dividend in future periods, although as an investment company dividends will represent a distribution of no less than 85% of gross income.
££££££££££££££
Still a yield of 17% so no change until more cash has been returned.
One. Buy Investment Trust’s that pay a dividend and re-invest those dividends to buy more Investment Trust’s that pay a dividend.
Two. Most dividends will gently increase, see earlier post.
Three. Book profits when shares increase in value and re-invest into the Snowball, sometimes u can buy back the shares sold at a better price.
Four. Add fuel to the fire by adding capital to the portfolio.
Five. Time in the market. As long as the dividend isn’t drastically changed, the holy grail of investing is to have a share in your portfolio, where all your capital has been returned and re-invested in the market and the yield is ???? on a share that sits in your account at zero, nil, zilch cost.
Note: The Snowball had an initial seed capital of 100k and the intention is not to add any further capital, mainly for monitoring the progress of the Snowball.
The good news is that there are simple things you can do to stop overthinking and start investing. In this article, we’ll explore the common investing overthinking traps and how to avoid them. We’ll also cover five simple steps to start investing — all you need to know in the beginning.
Common investing overthinking traps
One of the biggest challenges of investing is overcoming your own mind. It’s easy to get caught up in overthinking your decisions, which can lead to missed opportunities and financial regrets. In this section, we’ll explore some of the most common investing overthinking traps.
Information overload
The internet and social media have made it easier than ever to access information about investing. But with so much information or different investment providers available, it can be easy to become overwhelmed. With so much information around, you might feel that you need to learn everything about investing before you can start.
Analysis paralysis
Analysis paralysis is a state of overthinking where you become so overwhelmed with different options that you are unable to make a decision. It can be caused by several factors, including a fear of making the wrong decision, a lack of confidence in your judgment, or simply being presented with too many options.
Fear of investing
Many people are afraid to invest because they don’t want to lose money. This is a perfectly normal fear, but it can be harmful if it prevents you from investing at all.
It’s important to remember that investing comes with its risks. However, over the long term, the stock market has historically trended upwards. This means that if you invest for the long term, you are more likely to make money than lose money.
Lack of financial goals
I’ve recently spoken to people who haven’t started investing because they simply don’t know what they want to achieve with their money. If you’re in the same boat, I understand. It can be difficult to know where to start if you don’t have any financial goals.
Once you know what you’re working towards, you can start to develop an investment plan to help you achieve your goals.
5 simple steps to stop overthinking and start investing
1. Understand your goals
Understanding your financial goals is a good start before investing your money. It gives you structure and helps you make informed decisions. However, this doesn’t mean you need to have it all figured out before you start investing. Your goals can change over time, and that’s okay. The most important thing is to start somewhere and to be flexible.
Here are some tips for understanding your investment goals:
Think about your future. What do you want to achieve with your money? Do you want to retire early? Buy a house? Travel the world? Start a business? Once you have a general idea of what you want to achieve, you can start to develop specific goals.
Set SMART goals. Ideally, your goals should be Specific, Measurable, Achievable, Relevant, and Time-bound. For example, instead of just saying “I want to be rich”, define what rich means to you and instead, say something like “I want to have £1 million by the time I turn 50”. Alternatively, write down your dreams and work backwards to figure out how much and when you need to make them a reality.
If you don’t like to set goals or find it difficult to do so, it doesn’t mean that you can’t start investing. You can always figure out how much you can afford to invest (on a monthly basis for example) and get started based on that. You can then make any changes to your investment plan as your goals become more specific.
2. Understand risks and how to mitigate them
All investments carry some degree of risk. It’s important to understand the risks involved before you invest and to take steps to mitigate them.
Here are some ways to mitigate risk when investing:
Have an emergency fund. This is a savings account that you can use in case of an unexpected expense, such as a job loss or an emergency car or home repair. Having an emergency fund will help you avoid having to sell your investments for a loss if you need extra money urgently.
Start small. It’s a common financial misbelief, that you would need a lot of money to start investing. But that’s simply not true: You don’t need to invest a lot to get started. Start small and invest regularly over time.
Diversify your portfolio. This means investing in a variety of different industries and assets, such as stocks, bonds, and cash. One way to diversify your portfolio is to invest in funds instead of individual stocks. Funds are a collection of different stocks or bonds. By investing in a fund, you are essentially investing in a basket of different assets rather than putting all your eggs in one basket.
Invest for the long term. The stock market can be volatile in the short term, but it has historically trended upwards over the long term. This means that if you invest for the long term, you are more likely to make money than lose money.
Tax-efficient investment accounts are accounts that allow you to invest your money with reduced tax liability. This means that you will keep more of your earnings, which can help you grow your wealth faster.
There are a number of tax-efficient investment accounts available in the UK, including:
Stocks and Shares ISA (S&S ISA): This is a type of ISA that allows you to invest in stocks, shares, funds, and other investments. You can contribute up to £20,000 per tax year to a Stocks and Shares ISA. Any investment growth is tax-free, and you can withdraw your money at any time. If you are not planning to use your money to buy your first home, this is likely the best type of investment account for you.
Lifetime ISA (LISA): This is a type of ISA that is designed to help you save for your first home or retirement. It allows you to contribute up to £4,000 per tax year. The government will bonus your contributions by 25%, up to a maximum of £1,000 per tax year. You can withdraw your money from a Lifetime ISA tax-free if you are using it to buy your first home or retire after the age of 60. However, if you withdraw your money for any other reason, you will have to pay a 25% government withdrawal charge. It’s also worth noting that if you are looking to withdraw the money within 5 years, it’s often advisable to keep the money in the account in cash instead of investing it.
You can even pay into two ISAs in the same tax year provided they are different types of ISA. It would be fine to pay into both a Lifetime ISA and a Stocks & Shares ISA in one tax year as long as you’re below the £20,000 limit.
Tax-efficient investment accounts can be a great way to save money on capital gains tax and grow your wealth faster. However, it is important to choose the right account for your individual needs and circumstances.
4. Invest on autopilot
One way to overcome analysis paralysis is to take the decision out of your own hands and invest on autopilot. What I mean by this is to try and simplify your investments as much as possible so you don’t need to think about them constantly. Here are two helpful ways to do that:
1. Automate your investments. Setting up a regular investment plan is a great way to automate your investments. A regular plan can be a standing order that instructs your bank or investment provider to transfer a certain amount of money from your current account into your investment account on a regular basis, such as monthly. This type of automation has a number of advantages, including:
It is convenient and easy to set up.
It helps you to avoid having to make an investment decision every month.
It encourages you to invest regularly, even if you don’t have a lot of money to spare.
It can help you to benefit from compounding returns.
Setting up automated investments is easy and can be done in any investment app or platform. But for even more simplicity, some apps offer auto-investment tools that help you invest spare change or round up your purchases and invest the difference. InvestEngine is a great example of this type of app. It also offers a S&S ISA, plenty of different funds, and a welcome bonus of up to £50 for our readers, making it a good investment platform for beginners.
2. Invest in funds. We discussed previously how investing in funds can be a great way to diversify your portfolio and therefore decrease the level of risk. What’s more, investing in these baskets of multiple assets can minimise regular decision-making in your investing. Sure, you will still need to choose at least one fund to invest in. But if you choose something greatly varied such as S&P 500 or FTSE Global All Cap, you can often just set it all up and leave it doing its magic with automated payments to the fund.
5. Focus on the big picture
If you’re spending all your time trying to find the perfect stock to buy at the perfect price, you are missing the bigger picture. The most important decision is whether or not to invest at all.
For example, let’s say that you have been researching the stock market for months, but you are still not sure what to invest in. As a result, you have not yet invested any money. The opportunity cost of your inaction is the potential investment returns that you are missing out on. For example, if the stock market goes up by 10% in a year, you have missed out on a 10% return on your investment. The longer you wait to invest, the greater the opportunity cost.
That said, when you are starting your investment journey, remember that perfection is the enemy of making good decisions. It is impossible to make perfect investment decisions. So don’t be afraid to make decisions even if they’re not perfect. When making investment decisions, it is important to do some research and weigh the pros and cons of each option carefully. However, it is also important to be decisive and to act even if you do not have all the answers.
Conclusion: Stop overthinking and start investing
In the world of money, it’s important to strike a balance between thinking and overthinking. Overthinking your finances can freeze you up, stopping you from taking action and reaching your goals. But the five simple tips covered in this article will help you focus on the essentials, stop overthinking and start investing as a beginner. Remember, you don’t need to be an expert to get started. The cost of doing nothing can be much higher than making a few imperfect decisions. So, take the plunge, start investing today, and watch your money grow over time.
Crystal Amber retains pole position on Winterflood’s list of top monthly movers in the investment company space, but which two funds with practically identical names flew in from nowhere to take the number two and three spots?
Frank Buhagiar•27 Aug
The Top Five
Crystal Amber (CRS) holds on to top spot on Winterflood’s list of highest monthly movers in the investment company space, although the share price gain, at +20.9%, slightly lower than last week’s +23.9%. Could be all down to the news out this week. For as well as announcing more share buybacks, the small-cap fund put out a Holding(s) in Company announcement. This detailed a decrease in US-based 1607 Capital Partners’ stake in CRS to 9.7% from 10.7%. Market chose to focus on this last press release, it seems – share price closed down on the day.
Doric Nimrod Air 3 (DNA3) flies in from nowhere into second place with a +15.4% share price rise. And it has stablemate Doric Nimrod Air 2’s (DNA2) press release of 21 August 2024 to thank – DNA2 announced it will sell its remaining five Airbus A380-861 aircraft to Emirates at each of their respective lease end dates – currently expected between 1 October 2024 and 30 November 2024. The sale proceeds due to the company are £30.71m/US$40m for each plane, generating a combined total of £153.53m/US$200m for all five aircraft. The news was good for a +13.3% share price rise on the day for DNA2 bringing the monthly gain to +14.6%, enough for third place on Winterflood’s list.
Broker Jefferies explains why both Doric funds’ shares reacted well to the news “In our view, market expectations were for the sales to generate somewhere around $37m per aircraft, so the $40m across all five remaining A380s is a strong result. As such, there is positive readacross for the A380s held within sister-fund DNA3, where the leases expire in the latter half of next year”. No wonder both share prices took off.
Jupiter Green (JGC) drops two places to fourth but still managed to keep hold of the majority of its gains for the month – up +12.2% compared to +12.8% previously. That might be down to a press release put out on 21 August 2024 showing that FINDA SPV OY has increased its stake in the environmental investor to 4.15% from 3.05%. FINDA SPV OY, turns out, is managed by Asset Value Investors (AVI), manager of the AVI Global Trust (AGT). So, will be interesting to see if AVI, ahem, FINDA continues to build its stake, particularly as JGC recently announced it is evaluating options for the future of the business.
Golden Prospect Precious Metals (GPM) takes the final spot – shares are up +10.4% on no news. A look at the graph, however, reveals the share price spiked +8% higher on 20 August 2024, the day the gold price hit a year high of US$2,525 per troy ounce. If only all share price moves were that easy to explain.
Scottish Mortgage
Scottish Mortgage’s (SMT) share price finished the week ended Friday 23 August 2024 with a monthly loss of -1.7%, an improvement on the -4.2% deficit seen seven days earlier. The NAV monthly loss came in at -1.7% too, having been down -4.1% previously. The wider global sector is unchanged on the month compared to the previous -2.1%. A positive week for the Nasdaq, along with SMT’s ongoing share buyback programme – around three million shares were bought back over the course of the week – providing a positive backdrop for both share price and NAV.
