Simon Hogan*, a 53-year-old helicopter engineer from Hampshire, credits the success of his self-invested pension to Telegraph Money.
“I have picked most of the funds in my Sipp based on the tips that appear in these pages,” he said. “And they have been some of my best performers. My biggest holding, Guinness Sustainable Energy, has gained around 18pc since I read about it in the paper.”
Mr Hogan took control of his pension savings three years ago after he grew frustrated with poor returns from his company scheme.
“It was barely keeping up with the rest of the market,” he said. “I thought I could run it better myself.”
But with retirement just four years away, Mr Hogan is now unsure whether his portfolio will continue to grow, as chatter of a market bubble persists. He has a large proportion of his savings invested in US stocks.
“How do I know if my funds will keep going up? I am worried that I am not diversified enough to protect myself from a crash. I’m not an adventurous investor, I just want my money to keep growing steadily.”
Mr Hogan added that he was waiting to breakeven on his investment in China, where he has lost around a fifth of his money.
Richard Philbin, chief investment officer at Wellian Investment Solutions, said:
Mr Hogan does not view himself as adventurous, but his portfolio is very heavily skewed towards funds that invest in stocks. I think he should diversify by adding in a few bond funds and some investments in infrastructure assets, which typically have a lower level of volatility.
It is true that bond yields are low at the moment and growth will be muted, but they represent an important way to diversify, especially for Mr Hogan, if he is concerned about a crash so close to retirement. I rate funds such as Artemis Corporate Bond, Baillie Gifford Strategic Bond, TwentyFour Corporate Bond and Nomura Global Dynamic Bond. Around a quarter of the portfolio should be invested in this area to help reduce the chance of losing money.
A fifth of the portfolio should be allocated to infrastructure assets. The Premier Miton Global Infrastructure Income fund is great as it invests in pipelines and utilities, and has gained 37pc in the past three years.
We also like Cordiant Digital Infrastructure, a £967m investment trust that launched early this year. It invests in cell phone towers, data centres and fibre optic networks . In the past six months the trust’s share price has gained 10pc, but it trades at a steep 12pc premium to the value of its investments. Mr Hogan should keep watch for any dips that offer a better price to buy at.
Finally, 55pc of the portfolio should be in stocks.
Although we like the Marlborough fund, Mr Hogan should consider moving away from the risky nature of small companies. The Gresham House UK Multi-Cap Income fits the bill. It invests in companies of all sizes, and also pays a quarterly dividend which will help Mr Hogan, seeing as his retirement is only a few years away.
Paul Derrien, investment director at Canaccord Genuity, said:
Mr Hogan needs to take some swift action if he plans to retire within the next four years because his current portfolio is just too skewed to stocks.
The portfolio is very concentrated in UK companies. If Mr Hogan wants to stay invested in this market, I would suggest he removes the Fidelity UK tracker and replaces it with funds that have active managers, such as Fidelity Special Values or City of London Investment Trusts. These will give him a way to profit from the recent rally in “value” stocks, companies that trade at cheap levels relative to their profits, which looks like it will continue in 2022.
I would also reduce the holding in Marlborough UK Micro-Cap Growth and use the proceeds to invest in “themes” taking place around the world, such as healthcare and technology. We like the L&G Global Robotics and Automation ETF and the L&G Cyber Security ETF, as well as the NinetyOne Global Environment fund.
For healthcare, we also like the Polar Capital Healthcare Opportunities fund, which has gained 82pc in the past five years.
*Some readers wish not to use their real name. They are marked with an asterisk.