The Sunday Mail - 01.09.2019

September 1 • 2019 The Mail on Sunday (^)  Wealth 61
Whytechfund
is anidealhome
As parents are warned their generosity forRightmove
is putting their own old age in peril...
market during their retirement
through so-called income drawdown
plans. The benefit of doing this is
that your pot has a chance to grow as
you make steady withdrawals. As a
result, you may not need to set aside
as much to generate a £10,000
income that lasts for 23 years.
However, it’s a risky strategy –
you could end up worse off – so it
may pay to ask a professional
adviser to devise a safe plan for
you. Some advisers, for example,
will put your money into shares
that pay high dividends. You may
be able to live off this regular
income alone – called the ‘natural
yield’ – meaning you can leave all
your capital untouched.
If you’d rather leave an inherit-
ance to children than help them
financially now, this approach could
suit you. Nathan Long, senior ana-
lyst at Hargreaves Lansdown,
explains: ‘At the moment we could
set up a portfolio of shares and bonds
to generate an income of about 4 per
cent. A pot worth £250,000 produces
an income of £10,000.’
If you really want to guarantee a
£10,000 income for life, you can
buy a so-called annuity. This is an
insurance product where you hand
over a lump sum in exchange for a
set amount every month.
The bad news is that annuities –
particularly ones that rise in line
with inflation to maintain your
spending power – are expensive
because insurers calculate monthly
payouts based on interest rates,
which are low at the moment.
For example, if you have been
especially prudent and saved £1 mil-
lion – about the maximum permitted
if you don’t want to pay tax penalties

• you have certainly done well. But
  this does not mean you will live
  the life of a millionaire in retire-
  ment, says Robert Cochran, pen-
  sion specialist at Scottish Widows.
  He says: ‘Let’s assume you take

the permitted 25 per cent tax-free

lump sum from your pot – in this

case £250,000, which you put aside

for emergency costs, possibly as

well as a gift – and convert the rest

into an annuity. If you want the

income to rise with inflation each

year it will start at £976 a month.’

Jon Greer, head of retirement

policy at wealth manager Quilter,

says: ‘Some people could spend 40

years in retirement. Over the last

40 years, for example, inflation

meant that goods costing £100 in

1978 were priced at £564 in 2018.

So it’s worth thinking about how

you will inflation-proof your retire-

ment income.’

WHAT IF HELPING

LEAVES ME SHORT?

THE truth is working all this out

for your own personal circum-

stances is extremely complicated.

That’s where a financial adviser

can come in useful. Many have

access to so-called cashflow tools

that are a huge help working out

how much you can afford to give

away. These are computer pro-

grammes that can forecast how

much big outlays at the start of

retirement may impact later on.

You can find free (simple) cash-

flow calculators from investment

websites such as fisherinvest-

ments.com. Wealth managers 7IM

have a free app called ‘7Imagine’.

RetireEasy has paid for cashflow

modelling software for individuals

starting at £2.99 a month.

For the full effect, though, you

may need to visit an adviser. To

find one near you, use the Unbi-

ased.co.uk search tool. Sandra Paul

works for Prestwood Group, which

supplies financial planners with a

popular modelling package called

Truth. Using the software, a plan-

ner taps in all your details from

income, savings, property and

spending such as on cars and your

children’s education.

At a press of a button, the system

highlights how working a few years

longer than first planned could help

your money last much longer.

Paul says: ‘Let’s say you originally

planned to retire at the age of 60

but decide to carry on until 66. Not

only do you have six more years of

salary and six more years of pen-

sion contributions but the pension

also has six more years to grow.’

Another option for making up the

shortfall created by dipping into

your pot is to switch to investments

that are riskier but likely to produce

a higher return. Greer, from wealth

manager Quilter, adds: ‘Cashflow

modelling plans can project the

impact of inflation and the expected

returns on assets. It will highlight

that where you have cash savings

paying less than inflation they will

deplete in value over time.’

sally.hamilton@mailonsunday.

co.uk

DOWNBEAT chatter about the

state of the UK housing market

has not dimmed enthusiasm for

property website Rightmove – at

least not for James Thornton,

manager of the Rathbone Global

Opportunities Fund.

His aim is to pick stock market

winners, whatever their

business and wherever they are

in the world and Rightmove

makes the grade.

Even to the most casual

observer of UK housing market

data, it might seem reckless

right now to back a business that

relies on individuals buying and

selling homes in decent

numbers. But Rightmove has an

advantage – it is the largest

online portal used by 80 per cent

of Britain’s estate agents for

reaching both buyers and sellers

• and the tougher the market
  gets, the more help these agents
  will need – and will upgrade
  their packages with the website
  or so it hopes.
  Thornton says: ‘Estate agents
  will need to pedal harder to sell
  homes. Rightmove is a mission
  critical tool for them. They are
  more likely to
  turn the lights off
  before giving up
  their Rightmove
  subscription.’
  The company
  has been one of
  the fund’s best
  performing
  stocks, with its
  share price
  leaping about
  1,500 per cent
  since purchased
  in 2009. Thornton
  trawls the world
  for this kind of
  opportunity –
  where a company starts off
  under the radar.
  Many of the firms that he likes
  best generate growth using
  technology. About a quarter of
  the portfolio is made up of such
  technology holdings. Another
  tech favourite among the fund’s
  60 stocks is Match Group, the US
  firm that finds love for ‘lonely
  hearts’ through its empire of
  dating apps including Match.
  com, Tinder and PlentyofFish.
  Thornton recognises this is a
  volatile market but is reassured
  by management efforts to add
  premium services. He says:
  ‘Successful businesses in
  technology do not just put up
  prices. They need to give their
  customers something more.

Tinder lets everyone “swipe

right” for those matches they

like the look of. But it also offers

a Gold members-only service

that allows access to features

such as one that narrows the

field to those people who have

already “swiped right” for you.’

He also ‘weather-proofs’ the

portfolio with defensive stocks

that may grow less quickly,

which are vital in an era of

‘unreliable growth’, he says.

These include companies

involved in care homes, medical

equipment and healthcare.

Recession ‘ballast’ should be

provided by the US pawn shop

business First Cash. He says:

‘Pawn shops do not prey on their

customers. It is a clear

transaction. You bring in your

guitar and they value it real time

and then give you 60 per cent of

that value. Three

quarters of people

come back for their

item and the

typical interest

rate works out at

14 per cent.’

Another ‘ballast’

stock is Waste

Connections, one of

the largest US

rubbish collection

companies. He

says: ‘Garbage

collection is done

privately in the US.

Even in a recession

people want their

garbage collected.’

The fund’s global flavour has

transformed since Britain’s

Brexit vote. Back in 2016, about a

quarter of the portfolio was in

the UK – now it is just 5 per cent.

About two thirds are now in US

stocks ‘where the growth is’.

Thornton has a track record of

picking winners. Over the past

five years, the £1.8 billion fund

has delivered a return of 120 per

cent, compared with 66 per cent

for the average global fund and

31 per cent for the FTSE All-

Share. Charges of 0.78 per cent

a year are competitive. Patrick

Connolly, of adviser Chase de

Vere, says: ‘The manager’s skills

have produced excellent long-

term returns for investors.’

fund focus

By Sally Hamilton

September 2014 September 2019

RATHBONE GLOBAL OPPORTUNITIES FUND

TOP HOLDINGS (%)

140

120

100

80

60

40

20

0

-20

Amazon

Adobe

Paypal

Mastercard

Visa

Global Payments

Intuit

Match Group

Tencent

Sartorious Stedim

3.1

2.7

2.5

2.5

2.4

2.2

2.2

2.2

2.0

2.0

Fund outpaces rivals

Sector breakdown (%)

Holdings by geographical area (%)

Rathbone Global Opportunities

Sector average

FTSE All-Share Index

Total returns (%)

Technology 27

Consumer Financials 21

goods 13

Health

care 12

Consumer

services 12

Industrials 10 Cash 5

US 67

Europe 21

UK 5

Asia

Pacific 2

Other 5

September 2014 September 2019

RATHBONE GLOBAL OPPORTUNITIES FUND

TOP HOLDINGS (%)

140

120

100

80

60

40

20

0

-20

Amazon

Adobe

Paypal

Mastercard

Visa

Global Payments

Intuit

Match Group

Tencent

Sartorious Stedim

3.1

2.7

2.5

2.5

2.4

2.2

2.2

2.2

2.0

2.0

Fund outpaces rivals

Sector breakdown (%)

Holdings by geographical area (%)

Rathbone Global Opportunities

Sector average

FTSE All-Share Index

Total returns (%)

Technology 27

Consumer Financials 21

goods 13

Health

care 12

Consumer

services 12

Industrials 10 Cash 5

US 67

Europe 21

UK 5

Asia

Pacific 2

Other 5

wHat neil

woodford

HaS cHarged in feeS Since equity income waS cloSed

DILEMMA:

Parents wanting

to help children

with cash gifts

still need to

keep enough

in their own

retirement pots

Thompson