‘My 57-strong investment portfolio is an unwieldy mess – how do I fix it?’

Illo

Investing in the stock market over the long term is one of the best ways to grow your savings. But for some investors it can mean that over the years their portfolio becomes too big or too complicated to manage.

This has been the case for Tom Bennett*, a 68-year-old from Cumbria. Mr Bennett, who retired from his career as a financial adviser in 2019, has almost 60 holdings across the £24,000 invested in his Sipp.

“It’s a mess,” he said. “I have a ridiculous number of tiny holdings because I do not think it is worth paying the trading costs to get rid of them.” Mr Bennett said he wanted to simplify his portfolio and focus it more on growth.

“But with interest rates on the rise and lots of economic uncertainty, I’m wondering if I should go all-in on growth funds or if it’s better to go for more cautious investments. I also have £79,000 in cash that I want to invest.”

Dan Boardman-Weston, chief investment officer at BRI Wealth Management

We would suggest that Mr Bennett build a balanced portfolio that includes lower-risk assets such as cash, wealth preservation investment trusts and some infrastructure and commercial property.

We like Personal Assets Trust and the Ruffer Investment Company, both of which have very good long-term records: they have returned 50pc and 29pc respectively over the past three years.

We also like the Gravis UK Infrastructure Income fund, which consists mostly of infrastructure investment trusts and has an attractive yield of 4pc. For commercial property exposure we’d suggest looking at LXi Reit and Warehouse Reit.

LXi has a diversified portfolio of properties that it rents out to high-quality tenants on long leases with a strong degree of inflation protection. Warehouse Reit offers very attractive exposure to industrial property in Britain and also yields 4pc.

Turning to funds that invest in stocks, we would recommend the Liontrust Special Situations fund. It invests in British companies such as GlaxoSmithKline and BP as well as smaller, faster-growing companies on London’s junior stock market. If Mr Bennett is comfortable taking on some more risk, he could also look at the Gresham House UK Smaller Companies fund, which has returned 55pc in the past three years.

The Baillie Gifford US Growth trust, the Liontrust Global Dividend fund and the Evenlode Global Income fund are all good options for investing in international stocks. If Mr Bennett would like to include some more adventurous themes in his portfolio, we would recommend the BB Healthcare investment trust and the Regnan Sustainable Water & Waste fund. Healthcare and water are very attractive long-term investment themes that we are confident about in the coming decades.

Ben Yearsley, investment director at Shore Financial Planning

The portfolio has too many small holdings. I would invest its total £100,000 value with every holding at least £2,000 in size. There are two reasons for this: firstly so that you can easily keep track of what you are invested in and secondly so that each holding can have a meaningful impact on performance. I understand Mr Bennett’s point about dealing fees but I think he should just bite the bullet.

For this sophisticated investor who is focused on growth, I would suggest 70pc in trusts and funds, 20pc in individual shares and 10pc in cash to give him some flexibility to invest if the markets do fall sharply.

Wealth preservation trusts are a good option if he is concerned about market falls. Personal Assets Trust and Ruffer Investment Company are my two favourites. I like Mr Bennett’s holdings in the Fidelity Special Values and International Biotechnology trusts and I would increase their size.

I would also add some private equity into the mix. He could bolster his holding in the 3i trust or invest in something new like NB Private Equity, which trades at a 23.5pc discount and has gained 78pc in the past three years.

Finally, I would add the Pacific Assets trust for some geographical diversification in Asia, where there is plenty of growth. The Monks investment trust has been a reliable option for growth too and has holdings all over the world.

*Some readers wish not to use their real name. They are marked with an asterisk.