Investor opinion: “Baillie Gifford taught me…
Like many young people stuck at home during the pandemic, William Sharpe’s interest in the stock market was piqued by the controversy surrounding GameStop. This persuaded him that he should consider investment options more seriously.
Shares of this US retailer, which sold computer games, soared as much as 700% after thousands of small, amateur investors bought the stock. He caused major losses to Wall Street banks who bet against him, believing his shares would fall.
Much of this frenzy of activity was driven by social media and online forums, although quick wins quickly turned into big losses as trading was limited.
This roller coaster of activity could put off many potential investors. But Will, who is 21 and a student – although he also works as a private tutor – said it sparked his curiosity. Since then, he has been trying to train himself to make sound investment decisions.
To that end, Will has opened an ISA and says he is also considering a Sipp investment in the future. Through its ISA, it invests directly in a few stocks, alongside some funds. He invests through AJ Bell which he said was “very easy to use for a newbie like me”.
Will says: “All in all, I’ve probably been investing for about two years in total. My family works in the financial industry, so this has helped me. I hope to use some of this savings for a security deposit, although some of this will be invested for the longer term – hopefully helping me retire early one day!”
Lower the costs
When selecting funds, Will carefully considers costs. “Fees are a big driver for me, especially given current yields. For this reason, I’ve been turning to tracker index funds for a few months,” he says.
“Another factor would be risk, as I am relatively young I am willing to invest in riskier assets which has led to great returns but also terrible returns. However, this has not affected my approach and I will continue with this approach for many years to come.”
Will holds stakes in Vanguards’ S&P 500 ETF and the FTSE All-World. He says, “These are both long-term investments. I invest on a monthly basis with the goal of holding them forever.”
Vanguard S&P 500 has a Morningstar Gold Analyst Rating and a Star Rating of 5, reflecting the fact that it has outperformed both its benchmark and its peers, and Morningstar analysts expect that to continue. on the long term.
The global tracker has a silver rating and is described by analyst Dimitar Boyadzhiev as “a solid choice for adding global market equity exposure to an investment portfolio.”
Hedging and risk
Alongside these passive funds, Will also holds stakes in the gold-listed Trojan fund. It is more of a defensive fund, but it has performed relatively well given the current market volatility. He holds capitalization shares rather than distribution shares, with any dividends being reinvested.
Trojan is another vehicle with 5 stars. According to analyst Tom Mills, it has a number of advantages for investors seeking capital preservation and long-term capital growth. With a very experienced manager and consistent processes, he thinks she succeeds in setting herself apart from the competition.
Will also invested in the high-risk Baillie Gifford International. He says: “This fund showed me how fantastic and terrible investing can be. I’ve been an investor for just over a year and at one point I was up about 40%, but I am currently down 8%.Over the past three years, the fund has generated annualized returns of 6.28%.
The Silver-rated has seen its performance falter compared to its peers more recently. While the fund’s five-year year-over-year returns are 7.43% and three-year 6.16%, they are down 21.49% from the year to date. day.
Will says: “My investment in this fund also taught me that it may not be a good idea to be overexposed to a sector for too long. My portfolio has lent to tech growth, so I’m now trying to rebalance it slightly towards a more comprehensive portfolio sector.
Not all Wills investments are funds and ETFs. He also owns a stake in electric car maker Tesla (TSLA), formerly known as the world’s most valuable company. He says, “I’m a big fan of this company and wrote an article about how it works.”
The NASDAQ-listed company is currently trading in 3-star territory, just slightly below its fair value estimate of $750. Morningstar’s analyst team, however, noted that there is a great deal of uncertainty about the stock’s future price, but gave it a narrow economic moat.
Tesla shares have risen rapidly over the past two years, rising from $95.63 at the start of 2020 to a high of $1,222.09 in October 2021.
Will, who lives in the South West of the UK, says he hopes to stick to his current strategy over the next few years. “As a student, I have relatively few expenses, so my investment strategy won’t really be affected by higher inflation or a possible recession. However, I think real returns through 2024 will be poor. , so I’m not expecting much.”
But Will concludes that he’s looking to invest in hopes of building a portfolio and making sure his money is working harder for him, keeping pace with inflation.