It is a proud day when your children overtake you in life, whether it be by getting better grades than you could, going to university, getting a better job or moving into a nicer first home than you could have afforded.
For me, I have realised my daughter is a better investor than I am. I should be thrilled. Clearly the lessons I have taught her over the years are paying off and she is really taking what I tell her to heart.
The only problem is she is two years old.
Having moved around my own portfolio about the same time as I set up her junior ISA, it is fair to compare both of our savings pots. While I invest more each month in my own ISA, the percentage returns highlight a stark reality that my daughter’s ISA is more successful.
There are reasons for this, I keep telling myself. First is that I have had to dip into my savings over the past two years for emergencies, often taking from the best-performing funds – something I believe is recommended by advisers (although I am happy to be told otherwise should any advisers get in touch).
My daughter is invested in just two funds – the Vanguard LifeStrategy 100% fund and WS Gresham House UK Smaller Companies. I drip feed £50 per month into her account, split between the two, although the Vanguard fund makes up around three-quarters of her portfolio.
This has performed slightly better than the UK smaller companies fund, but not by much. It was also the first fund I bought, giving it longer to make the returns.
The Vanguard fund has made her 15.7%, while the Gresham House portfolio is up 14.1% in a much shorter timeframe.
So successful was her investment in WS Gresham House UK Smaller Companies that I incorporated it into my own ISA. Unfortunately, since adding it to my portfolio the fund has made just 2.4%.
One consolation is that Rathbone Global Opportunities, my largest holding, has also been my best performing, up 17% over the past few years.
The same can’t be said for Fidelity Asia Pacific Opportunities, the other fund in my ISA, which has had a torrid time, but is at least finally out of the red.
I have owned this fund the longest. Most of this time it has been lossmaking, but with China’s resurgence in recent weeks the fund has launched into positive territory, albeit only by 5.4%. Still, a profit is a profit.
The thing I have learned from the above observations is the power of not touching your money. The only real difference between the two ISAs is I have had to dip into savings, which has eroded some of the gains I have made, while my daughter’s portfolio continues rising.
Timing is also important. Had I taken the same risk I did with her JISA and invested in WS Gresham House UK Smaller Companies earlier, I would have made much higher returns. As it is, waiting a few months before biting the bullet means I missed out on the early returns my daughter made.
Perhaps I should start asking whoever is running her portfolio for advice. He seems like a chap who knows what he is doing…