A few days ago I filled in my occupation as “retired”. On Monday morning my spirits lifted as I walked up the Thames to Richmond, musing that I am not retired.
My new role is manager of a Fund of Funds. I’m enjoying it and am supported by my in-house Head of Legal and IT, and my Office Manager. Overheads are low, in contrast to other Fund of Funds: I take the Head of Legal/IT out to lunch and the Office Manager gets a Christmas bonus. I don’t bother with HR or Compliance and double-up as Credit Officer myself.
If my Fund of Funds were to be open to external investors I’d have to explain my investment philosophy. I used to “stock pick” but I have few shares in individual companies now and I’m a “top-down” investor. I pick a theme, recently Emerging Markets and Vietnam, and pick funds that I think are good stock pickers (“bottom-up” is the jargon). The attitude of the custodians of my money is interesting. Alliance Trust carry out instructions, no questions asked: Invesco periodically ask me to sign a disclaimer to the effect that my decisions are my own: McInroy & Wood have, not in writing, classified me as a “fully-functioning alcoholic”. Good that I’m deemed to be fully-functioning, a sort of MOT Pass for an elderly investor.
Since buying two funds in Vietnam they have lost almost 10%. It is a volatile market. Often it is better to gain exposure by simply and cheaply buying a Tracker or an ETF, something I have never done. It would be especially unwise in Vietnam. Their VN Index (like FTSE) is not representative of the wider Vietnamese economy (like FTSE). The fifteen biggest companies represent 70% of the index by weighting and furthermore one company, Vingroup and two of its subsidiaries, controls 23% of the index. Neither of my funds have exposure to Vingroup meaning their performance will diverge from the index.
I have identified a third Vietnam fund, also with no Vingroup shares, but although it is quoted on AIM it has a dollar price and Alliance Trust are investigating whether I can buy it and if it qualifies for an ISA. Assuming that goes forward I will have committed about 3% of my portfolio to Vietnam. What will be interesting is what that proportion will be in three and five years. That’s what matters.
In these uncertain times I boost morale by dancing around the kitchen to this.