The Sunday Times February 13, 2022 13
MONEY
mature profit-taking, when I sold some
shares at $146 last September and $162
last December, AAPL still accounts for
just over 7 per cent of my life savings. So
the most important thing I have learned
from this experience so far is that there is
no point in investors fretting about the
past, because we can only invest in the
present for the future.
What about the worry that you buy the
next FB, instead of picking AAPL or
AMZN?
Diversification is the simplest and
most effective way to diminish the risk of
buying the wrong share. That’s why I
have been a shareholder in Polar Capital
Technology (PCT), a £3.4 billion global
investment trust, for more than a decade.
I transferred these shares into my “for-
ever fund” at £4.33 each when I began
writing this column in September, 2013,
and topped up last month, buying a few
more at £23.47.
At first that looked like a mistake
because the price continued falling until$172
The price of Apple shares this
week that Cowie bought for
$23.75 in February, 2016it recovered to £23.52 this week. The
medium to long-term returns remain
encouraging. According to the independ-
ent statisticians Morningstar, this invest-
ment trust delivered 557 per cent growth
over the past decade and 162 per cent
over the past five years but made no
progress at all over the past 12 months.
That may explain why the shares are 7 per
cent below their net asset value (NAV).
PCT’s portfolio includes, in descend-
ing order by value, Microsoft (MSFT),
AAPL and Alphabet (GOOGL). To be fair,
FB is also in this investment trust’s top 10
assets. So are Taiwan Semiconductor
Manufacturing (TWS) plus the Korean
giant Samsung (SMS).
It is hard to imagine a world where we
won’t be spending ever larger sums on
digital goods and services provided by
these businesses. So I am content for PCT
to be my ninth most valuable sharehold-
ing, allowing professional fund managers
to allocate assets in specialist areas where
I know next to nothing. Remember, weIgnore the turmoil, in the future we’ll
need the tech giants more than ever
Ian Cowie Personal Account
ST DIGITAL
Read a full list of Ian Cowie’s
‘forever’ fund
thesundaytimes.co.uk/cowieholdingsdon’t need to understand how a plasma
TV works to enjoy watching one. Many of
us spend most of our life working for
money — investing in shares is simply a
way to make money work for you.
Coming back to where we started, this
month’s tech-wreck should be good for
young investors. They are more likely to
be familiar with digital services, and have
the ability to distinguish what’s hot from
what’s not. Either way, they will almost
certainly have more time in which to be
proved right. Anyone in their twenties or
thirties who can afford to set aside money
has a greater ability to wait for income
and growth than someone in their sixties
or seventies.
So a period of falling share prices can
be seen not as a problem but as an oppor-
tunity. The only question is whether you
are going to seize it or not. Wishing you
had done something weeks or years ago
is a waste of time. Stock market invest-
ment is relatively simple — but not easy.
You have to be in it to win it.Valentine’s Day tomorrow reminds me
of the Square Mile saying that we should
never fall in love with a share. The idea is
to encourage hard-headed calculation.
But the truth is investors do become
fond of funds and enthusiastic about
equities that bring us joy. Few, if any,
ever forget our very first ”ten-bagger”,
where the price soared tenfold. For
example, the investment trust JP Morgan
Indian ( JII) was called Robert Fleming
Indian in June, 1996, when I paid 63p for
shares that son exceeded £6 and traded
at £7.99 on Friday.
Sad to say, its performance has been
poor for ages and JII has delivered the
lowest returns in the India sector over
the past five and 10 years. Fortunately, I
took profits long ago and diversified into
India Capital Growth (IGC), which
focuses more on medium-sized and
smaller companies, so I tend to take a
very long-term and perhaps slightly
sentimental view of JII.
Fever-tree Drinks (FEVR) was another
ten-bagger. I paid £2.11 in March, 2015,
for shares I sold at £36.52 in October,
2018, to help buy a cottage for Sue, my
wife. Well, she was the one who gave me
the idea. The tonic-maker has gone a bit
flat since then, trading at £20.86 on
Friday, but the rump remains my 11th
most valuable holding. If British shares
stay this cheap relative to international
rivals, a foreign takeover bid would be
no surprise.
Against all that, I have suffered my
share of big losers, frequently reported
here as Cowie’s Clangers. But this old
romantic continues to believe it is better
to have invested and lost, occasionally,
than never to have invested at all.The shares
I have loved
and lost...
£21.85
Fever-Tree drinks share price this
week. Cowie paid £2.11 in March, 2015I
t was the best of times for investors,
it was the worst of times for inves-
tors. February has been a tale of
two technology giants — a loser and
a winner — but I predict a happy
ending.
Talk of a “tech-wreck” is only
half the truth because some inves-
tors are selling risk assets, while
others are buying what they hope
will be bargains. What you see depends
on where you are standing, and how long
you can afford to wait for what you want.
The Facebook founder Mark Zucker-
berg found little to like when his dreams
of creating an alternative reality — or
metaverse — collided with financial real-
ity. That wiped a record $230 billion (£172
billion) off the value of his company, now
called Meta Platforms (stock market
ticker: FB). Such massive wealth destruc-
tion was enough to depress the Nasdaq,
the benchmark index for digital stocks, to
the point where it traded 10 per cent
lower this week than its starting point for
the year.
Meanwhile, the online retailer, Ama-
zon (AMZN), continues to deliver wel-
come numbers to investors — including a
price hike for its Prime customers — and
rebooted its stock market value to soar
$190 billion in a single day. Talk about
two views make a market!
Nobody knows what will happen next
in the short-term. But medium to long-
term investors, those of us who intend to
remain invested for at least five years and
preferably forever, may find some histor-
ical perspective helpful.
By chance, this week marks exactly six
years since this Apple (AAPL) customer,
who has bought their computers since
the 1990s, stopped dithering and
invested in what became the biggest tech
business in the world. After years of futile
fears that it was too late to buy a stake, I
paid the equivalent of $23.75 per AAPL
share, allowing for a subsequent four-for-
one stock split. Back then, plenty of cyn-
ics pointed out that the company’s crea-
tive cofounder, Steve Jobs, had died and
argued that its products were overpriced
or that the business was past its best and
set for decline.
But even after this month’s tech-
wreck, AAPL shares trade at $172 or more
than seven times what I paid. Over the
same period, the cash value of the quar-
terly dividends delivered to investors has
also increased by more than two thirds.
Even after what turned out to be pre-META/EPAMark ZuckerbergFACEBOOKETF, launched last April,
excludes companies that do
not comply with UNGC
principles, as well as those
involved in chemical and
biological weapons.
BAE Systems accounts for
4.2 per cent of its assets and
British American Tobacco,
fellow cigarette maker
Imperial Brands, and the
miners Anglo American and
Rio Tinto are in the top ten.
Alan Miller from the wealth
manager SCM Direct said that
LGIM’s excuses were
“pathetic, intellectually
dishonest and totally
misleading to clients who
have the desire to do good.
L&G should scrupulously
oversee all their funds
properly and question
whether any particular ESG
restrictions/label on a fund
are, in effect, greenwashing.
“It’s like a restaurant
selling rotten food, you would
expect the health inspector to
stop it being sold. Why is the
FCA not doing the same?”
Venkatramanan said LGIM
has two other ESG ranges,
Responsible Exclusions and
Future World, with more ESG
exclusions. On its website,
LGIM says its purpose “is to
create a better future through
responsible investing”.Oil and weapons in ‘green’ fund
A fund that claims to be
sustainable and green invests
in oil, arms, mining and a
tobacco company.
Legal & General
Investment Management
(LGIM) says its £19 million
L&G UK Equity Exchange
traded fund (ETF) “promotes
a range of environmental and
social characteristics”.
Despite this, its top ten
holdings include the cigarette
maker British American
Tobacco, the oil giants BP and
Royal Dutch Shell, the miner
Rio Tinto and Diageo, which
makes Guinness, Baileys and
Johnnie Walker whisky. It has
2.3 per cent in Glencore, the
world’s largest coal mining
company, and about 1 per
cent in BAE Systems, which
makes weapons systems and
combat aircraft.
An ETF is a form of tracker
fund that uses algorithms to
replicate the performance of
and holdings in an index. The
ETF tracks the Solactive UK
Large & Mid Cap Index,
which excludes companies
that derive 30 per cent or
more of their revenues from
coal mining, those in breach
of at least one United Nations
Global Compact (UNGC)principle for three years
running, and those involved
in controversial weapons.
The aforementioned
companies in tobacco, oil,
mining, drinks and weapons
do not contravene the index’s
exclusion policy. The tracker
is allowed to be categorised
under the Sustainable
Finance Disclosure
Regulation regime, an EU
initiative to identify funds run
on ESG grounds — yet it owns
the same number of “sin”
stocks as a plain UK equity
index tracker.
The L&G ETF holds three
companies, accounting for8.6 per cent of its portfolio,
with UNGC violations,
compared with the HSBC
FTSE all-share Index fund,
which holds two accounting
for 4 per cent. The UNGC
principles outline minimum
standards on human rights,
labour, the environment and
anti-corruption.
Aanand Venkatramanan
from LGIM said that the ETF
was listed on the stock
market in November 2018,
when there was less
awareness of ESG issues.
A second ETF from LGIM,
the L&G Quality Equity
Dividends ESG Exclusions UKDavid Brenchleycent last year. Five-year fixes
can be had for just over
1.5 per cent. Halifax has a ten-
year fix at 1.68 per cent if you
have a 40 per cent deposit
and a £995 fee.
Some variable rate deals
are cheaper, but these will be
affected by a base rate rise.
HSBC has a two-year tracker
at 0.74 percentage points
above the base rate. A single
rise of 0.25 per cent will mean
that those who take sign up
for this will be worse off than
those on the cheapest fixed
deals.
The HSBC deal also has a
£999 fee and you need a 40
per cent deposit. There is no
early repayment charge.Get a new mortgage while you can
It will be harder to get a
mortgage this summer as
lenders take the rising cost of
living into account before
deciding how much they will
lend you.
Brokers are urging
homeowners who have six
months or less left on their
deal to sign up to a new
product so that they go
through affordability tests
before they get tougher.
Lenders apply these tests to
ensure you can repay a
mortgage, looking at your
income, spending and debts.
Energy costs will soar in
April when the price cap goesup, affecting anyone on their
supplier’s variable tariff. It
will cost a typical household
on a dual fuel deal an extra
£700 a year. Water bills and
council tax bills will also go
up there will be a rise in
national insurance to pay for
social care.
These measures are likely
to affect affordability tests
from June or July, according
to mortgage brokers, making
it harder to get the best deals.
Chris Sykes from the
broker Private Finance said:
“It may mean you cannot
borrow as much as you once
could if your income hasn’t
risen in line with the cost of
living. Mortgage rates areexpected to continue to
increase, so starting the
remortgage process sooner
rather than later could be
beneficial.”
The Bank of England
increased its base rate from a
record low of 0.1 per cent to
0.25 per cent in December
and it went up again to
0.5 per cent on February 3.
Analysts expect at least
one more Bank rate rise this
year and more in 2023. Rates
will be at 2 per cent by the
end of next year according to
the analyst Capital
Economics.
The lowest two-year fixed
rates are about 1.4 per cent
compared with less than 1 perAli HussainBAE Systems, developer of the Dreadnought submarine, is
included in a fund favouring “social characteristics”