The head of research at Hargreaves Lansdown formerly held around 5 per cent of his pension portfolio in the fund, but has taken that cash and profits from elsewhere to take his weighting in CF Woodford Equity Income to 10 per cent. “I’ve just sold out of the UK pension fund version of Invesco Perpetual High Income. I started buying this many years ago and my wife has exposure to it as well,” said Dampier (pictured).
“It has had a bit more in the way of small caps, but performance has been pretty similar to High Income.”
Performance of fund vs index, Mar 1994 – Mar 2014
Source: FE Analytics
“I sold out of it [last week]. It was around 5 per cent of my pension fund, but I’m going to be taking this up to 10 per cent when I buy CF Woodford Equity Income.”
“I don’t think there’s anything surprising about it. Why would I? It’s the same manager, the same style of fund and it’s served me incredibly well.”
Following on from Dampier’s comments regarding Woodford, FE Trustnet asked whether we could have access to his entire pension portfolio, as well as the relevant weightings.
Source: FE Analytics
The portfolio includes some of the highest profile funds in the entire IMA unit trust and OEIC universe, and some more esoteric investments to boot.
Along with Woodford, who is likely to account for more than 10 per cent of Dampier’s pension given his new fund’s inevitable holding in HL Multi Manager Income & Growth, FE Alpha Manager Giles Hargreave has the biggest weighting.
His Nano Cap Growth fund – which is already closed to new money following its launch last year – and the Micro Cap Growth fund have a combined weighting of 12 per cent.
FE data shows that the micro-cap portfolio is one of the best performers in its IMA UK Smaller Companies sector since its launch in October 2004 and has also been one of the least volatile.
Performance of fund vs sector since inception
Source: FE Analytics
Hargreave is renowned for diversifying his assets across hundreds of holdings – a feature that Dampier likes, as it minimises the risk of default.
He has plenty of experience, having managed money since the late 1960s, but the flipside to this is that he is unlikely to be running Marlborough Micro Cap Growth in 10 or 20 years’ time.
Dampier is relaxed about this, however: “Hargreave is not a one-man band – he has an excellent team around him, with a good mix of talented youngsters and experienced managers in their fifties.”
“He is in his mid-sixties and nowadays I see no reason why he can’t manage into his seventies. He has such a passion for what he does.”
Dampier says he has had similar conversations with Woodford regarding retirement and believes the manager is likely to be running money for at least another 15 years.
Many readers will probably never have heard of the Darwin Leisure Property fund, which makes up around one-10th of Dampier’s portfolio. This is the only unregulated investment in his pension, he says, but has also been one of the best performing.
“I invested in it about 10 years ago and it has delivered around 9 or 10 per cent annualised returns,” he explained.
“The fund invests in caravan sites. Some of these sites are in wonderful positions but are a bit run down, and these guys come in and renovate them, making them look more like chalets. The local authorities like them because they look great, and all in all they’ve been a really good investment.”
Dampier also has a major stake in Luke Kerr’s Old Mutual UK Dynamic fund – a high-conviction UK growth portfolio that draws on the best ideas from the group’s UK equity desk, including Richard Buxton’s Old Mutual UK Alpha fund, Daniel Nickols’ Old Mutual UK Smaller Companies fund and Richard Watts’ Old Mutual UK Mid Cap fund.
Following Neil Woodford’s departure from Invesco Perpetual, Dampier says he now rates Old Mutual as the strongest group for UK equities.
Kerr has benefited from his ability to short stocks, but Dampier says it is the team’s ability to back future winners that sets the Dynamic fund from the competition. FE data shows the fund is a top-decile performer in its sector since its launch in early 2009, with returns in excess of 170 per cent.
Another high-conviction growth portfolio – CF Lindsell Train Global Equity – is a relatively new holding for Dampier. He likes the fact it gives him exposure to other developed countries and rates Nick Train as one of the UK’s strongest stockpickers.
The fund has returned 51.17 per cent since its launch in March 2011, compared with 28.09 per cent from the IMA Global sector average.
Dampier accepts that much of the tail of his pension has had a rough time of late. He says that the failure to take profits in the likes of Neptune Russia & Greater Russia and BlackRock Gold & General is one of his biggest mistakes as a pension investor.
“It’s probably my biggest regret – the way I’ve failed to sell at the right time in specialist funds,” he said.
Performance of funds and index over 5yrs
Source: FE Analytics
“In 2010 I should have recognised that I’d done so well from the BlackRock fund. Yes I’m a long-term investor, but in something so specialist I think it’s better to take a profit and say ‘thank you very much’.”
“That said, something like Junior Oils has been in a huge bear market for the past three or four years, so I’m not going to be selling now.”
He says he is tempted to add to his Japan holdings following a poor run for the region in 2014, but is watching from the side-lines at the moment.
The remaining funds in Dampier’s portfolio are for diversification purposes. The M&G UK Inflation Linked Corporate Bond portfolio is unsurprisingly an inflation hedge, while the likes of Schroder UK Absolute Target, Artemis Strategic Assets and Royal London Sterling Extra Yield Bond are all helping to cut down on his direct market exposure.
“I have been starting to de-risk to some extent. I’m not retiring tomorrow, but I’m 58 in October and there’s not a lot of point in me trying to shoot the lights out now as I get closer – especially because of the new pension limit,” he explained.
“At other times I’ve been much more bullish, but I am starting to look a little bit more at capital protection.”
“That said, I am not one for de-risking for the sake of it, because things that are called low-risk are the very opposite.”
He says he has been disappointed by the performance of William Littlewood's Artemis Strategic Assets fund since its launch in 2009, but is sticking with the manager for now.
“The shorting of the bonds has cost the fund 20 per cent at least. It’s extraordinary how many bond managers have got things wrong,” he added.
Dampier has become more and more attracted to equity income, which he says gives investors in his position a good balance between risk and return.
“You get your dividends and in general companies are good about not cutting them,” he explained.
“You get a lot of people putting their money in building societies and living off the interest, but at the same time the capital is being worn away by inflation. In an equity income fund I’m getting more in the way of yield and the potential for growth.”
“Of course there is the potential for losing capital, but given my age, there’s every chance that one of either myself or my wife will be relying on this pot for another 30 years.”
“Someone like Neil Woodford has made back money from dividends over 25 years, so I'm quite relaxed. You get 4 or 5 per cent a year in dividends and as long as you don’t need the money tomorrow, you can ride through.”
Dampier says he may add some more equity income funds to his portfolio in the future, or may instead choose to increase his weighting to CF Woodford Equity Income and HL Multi Manager Income & Growth.
