A reader dubbed me “Star Investor” in a comment last month, making me reflect that perhaps I have been a boastful toad in business posts. So today I’m going to set the record straight.
About thirty years ago the fore-runner of an ISA was introduced: a PEP. I subscribed at inception, gave my money to Johnson Fry (no longer in business) and lost 50% in a year. I moved to another PEP provider and invested the money myself. I made speculative investments that all went wrong. Even slightly safer choices like Marconi and Mountleigh became worthless.
Then there was the Business Expansion Scheme (BES), for me a wealth contraction scheme. By some fancy footwork I got out relatively unscathed from a hotel in Glasgow and a garden centre. I lost everything in a store on the North Circular that sold sofas – sofas so awful that I would not have had one in my house. A property company that rented accommodation to students in Glasgow is still in my portfolio. It has changed name many times and once, in a blaze of glory, was listed on the FTSE 250. I lost everything in a small chain of London wine bars, and lost something in a nascent fund manager. In fact, if you put my losses end-to-end, they’d stretch from Piccadilly Circus to Land’s End.
But what’s gone wrong recently? Some two years ago I advocated investing in Japan and chose Aberdeen Japan investment trust. I have reinvested the dividends (about 1% annually) and so far have lost about 5% on this speculation. Yesterday I narrowly avoided a potential mistake. I recommended British Empire Trust in August 2018. This is how the post starts:
I find it reassuring when a company sticks to its original name, no matter how inappropriate it may have become. Carphone Warehouse is an example and British Empire Trust, founded in 1889, another.
I finally got some money in connection with a pension scheme and was all set to buy British Empire Trust. Can you believe it? It’s changed its name to AVI Global Trust. A name change is often a harbinger of calamity as I found when Steady-Eddie GEC became Flash-Harry Marconi. On the other hand it trades at a deep discount and its ongoing charge of 0.87% is reasonable.
So what put me off? The Financial Conduct Authority and its predecessors have a reputation for shutting stable doors after horses have bolted. That’s inevitable but they can and do give guidance to naive investors like me. As so often in life there is a binary choice. You can either read a Key Investment Document (KID) or not read it and tick a box to confirm you’ve read it. Here’s the KID for British Empire Trust/AVI Global Trust. Somewhere buried in the entrails of that fund are some huge costs – 3.45% annually. It is really hard to believe that with that millstone round my neck I can make any money in this investment trust. The share price is up 52% over five years but Monks and Scottish Mortgage are up 137% and 153% respectively over the same period.
If you have bought Aberdeen Japan and/or British Empire Trust you won’t have lost all your money but you might think of switching into something more sensible. I topped up my holding in Personal Assets.