Fund Management

Today there is a greater degree of transparency in financial markets than there has ever been in the history of the world. There is certainly enough free, quickly accessible data for me to manage my own investments.

But, of course there’s a but, one piece of data, as far as I know, has not been published. As you probably know ISAs under a variety of different names started in 1987. They were called PEPs (Personal Equity Plans) and up to £2,500 a year could be contributed into this new tax free wrapper. Investing in a PEP was free of Capital Gains Tax so it was bloody obvious that this was the place to make a killing free of tax. I set about investing in highly speculative companies and inevitably paid the consequences. It took a surprisingly long time for me to realise investing in this tax free wrapper was like investing in my own pension or personal account. Others realised before me and have in excess of a million pounds in their ISAs. Indeed one former Conservative MP, life peer and part-time FT columnist has in excess of £10 million in his ISA.

The annual contribution to an ISA is £20,000. I pay this in every year and these days, because I too have finally cracked the million pound barrier, add to existing holdings. I have about 30% in Personal Assets Trust and the rest fairly evenly divided between six funds and a small holding in one company, Haleon, which was spun off from GSK a few years ago. Earlier this year I put £10,000 in RIT.

The doctor told me last week I have dangerously low blood pressure. Be that as it may, yesterday I had a rush of blood to the head. I sold all my holding in a Vietnam fund and reinvested in VEIL (Vietnam Enterprise) where I already have a holding. VEIL has out performed the other fund and as a member of FTSE 250 is a better and safer bet. Then I sold all my holding in Legal & General. You will recall I only bought L&G as a short term measure in 2020 and because it pays such a good income (free of tax in an ISA). You can read my reasoning here.

I reinvested this money in a fund I used to hold, namely Merchants Trust. MT was founded in 1899 and invests in high yielding FTSE 100 stocks. MT itself is in the FTSE 250. It yields 5%, is at a discount to NAV of less than 6% (small these days) and has returned 50% over the last five years. It is a perennial favourite with ISA savers. In the past year MT has lost almost 3% thanks to our Labour government’s economic policies. These can be summarised as ’companies don’t vote’ so they are ripe for taxation of one sort or another. I still have £10,000 to invest this year and it is my intention to buy more MT. I should say I am reinvesting the MT interest stream. By happy chance the shares go ex dividend in two days so that’s a little bonus. If I reinvested income in my own share account it is a CGT nightmare, so I don’t.

In a world where, as soon as you make some money, the government of the day takes it away, ISAs provide some solace. But I haven’t told you the data that ISA providers do not publish. There must be more than a few ISA holders who, because of the tax free environment, over-trade in their ISAs. This data is not published because, frankly, every trade generates commission for the provider and sod the client.

Here’s Elena Roger singing the title role in Evita. When she was playing Evita in the West End I had Sunday lunch with her in a friend’s flat and subsequently went to Covent Garden with her and we met Juan Diego in his dressing room after the opera. I must stop name dropping.