Aggressive long term investment themes.

JohnRo

I've been managing and investing an inheritance for a few years, it's done well, I invested the bulk of it with SMT.

I've also added a small WWH weighting a year ago and intend building that to encompass health/biotech exposure. I'm aware of the healthcare overlap with SMT but that's fine.

There's a small WPCT holding which I'm almost at the point of liquidating and adding to WWH.

I'm casting around for other themes to consider, aggressive in risk terms but far from reckless. I'm not worried about the outcome, just interested in trying to capture 'aggressive' and construct a concentrated portfolio of perhaps four or five IT holdings, then simply rebalance annually. Given the kids age a 10-15 year investment horizon is a minimum.

Automation and robotics are two of the themes I see developing in future, how best to capture their inevitable growth with concentrated investment products is the difficulty.

Does anyone have any other IT suggestions or pointers?

AnotherJoe

What or who is SMT ? Is that the broker? - (edit, I see its Scottish Mortgage Trust)
Had to look it up - very high tech.

Smaller Companies.
Emerging markets.
Property.

Or I'd pick a generic global fund.

I'd let SMT worry about Automation and Robotics, looks like the sort of thing they would cover. Or, head over to Silicon Investor and see if there are any companies mentioned in there but you'd need to buy direct shares i think, not an IT.

.. Just a final thought, you should be worried about the outcome, that's why you are doing this

JohnRo

I'm not worried in the sense that I don't envisage a negative impact long term, I've got the investment covered anyway if it came to that, and that I accept the risk these investments are exposed to.

In general, Smaller companies are very much aligned with the large cap market. For this money I'm more interested in particular sectors than in cap filters and the like.

EM is perhaps something to consider but again that's a bit too general.

Property, perhaps at a later date. Given current debt levels and interest rates I'm not sure how that's likely to pan out in the medium term.

I like the look of PCT, but that's overlapping SMT. Not that it's a bad thing to hold both.

I've thought about things like renewables, infrastructure etc. but I don't they fit very comfortably with 'aggressive' .

Ray_Singh-Blue

Everyone is talking about robots and automation. How do you decide whether expectations of future growth are already price in?

JohnRo

It's a fair question, the answer as always is that hindsight will have the answer. When you say everyone though, I'm not sure that's anywhere close to accurate.

george4064

Few ITs I am invested in that might be of interest:

- AIF (split capital trust with a portfolio 75% in UK smaller companies and 25% in government bonds and corporate bonds). Latest research note here: https://www.premierfunds.co.uk/media/58586/acorn-income-fund-edision-investment-research-report.pdf

- BIOG (you probably have enough healthcare exposure, but is definitely more spicy than WWH).

bowlhead99

The trouble is that "themes" can take years or decades to come to fruition. Of course, high technology is something we'll see lots of in the future. You could probably have said that in the late 40s / early 50s after they invented and marketed the transistor and there were lots of people writing sci fi novels about living in space. But though it's an inevitable "theme" for the future, it doesn't necessarily follow that a fund focussed on technology would be a definite leader for one specific 10-year period.

So too healthcare, with ageing population etc. The population has been growing and ageing for a long time both in the developed and developing world. Some decades, healthcare will be a good place to be. Others it won't, as assets will be fairly priced on their potential at the start of the decade and any gains on the companies that successfully trial the Next Big Thing are cancelled out by the losses in the ones that get beaten to market ; or by the losses on the ones that just plain fail because the stage three efficacy trial that cost a few hundred million was a faulty design, or some other gamble didn't pay off. The established players will have more people to sell more drugs to ; but their patent exclusivity will run out, reducing profits if they can't replace with something new.

You can take advantage of ageing population with all sorts of industry sectors, as people living longer have more years in which to consume food, clothes, accommodation, transportation, white goods etc. Transport maybe less so because more people have more years in which to travel, but less need to travel as technology helps them work from home instead of commuting or lets them video call with friends or co-workers instead of attending the family party or business meeting in person. But logistics firms still need to get "stuff" to people even if they don't need to get people to stuff.

It can be difficult to figure out the future and make money out of it. Robots and automation will have our jobs in the end, with outsourcing as a precursor on many sectors. But there aren't any actively managed ITs focusing exclusively on robots. You can get an ETF tracking a custom index of firms involved in robotics and automation, from a couple of providers - but they haven't been going long enough to ascertain whether the rationale for picking the member firms turns out to be a good one, and it will take a decade to find out if this decade was the right decade to do it...

"Frontier markets", regardless of industry, sounds a good place to be invested for the future. As Aberdeen mentioned in the documentation accompanying the recent proposed investment strategy change for their AFMC investment company, frontier markets have 30%+ of the world's population, 9% of its GDP, yet only 0.2% of its equity market capitalisation. Seems there is probably money to be made as the world matures. But will that be this decade or next or the one after that...

You mention you are shunning WPCT now. I guess you didn't want to wait "patiently" for the returns. One of the things Woodford was offering there was exposure to smaller listed and unlisted companies along with a liquidity pool from a more traditional larger portfolio.

If you wanted some of that access to early stage UK companies, listed and unlisted, without the largecap and bio tilt that Woodford was offering, you could look at adding some VCTs over the next few tax years. A couple might hit it big, and if not, there's still some decent tax breaks.

tg99

In terms of individual frontier markets, Argentina is one I've taken direct exposure to in what one might describe as a long-term high risk / aggressive position (though only small part of my portfolio). Have BlackRock Frontiers IT too and an ishares ETF covering the broader Frontier universe.

slowpoke_rodriguez

Alternative energy- Wind, solar and tidal power, lithium mines, energy storage, etc...

JohnRo

bowlhead99 wrote: »

You mention you are shunning WPCT now. I guess you didn't want to wait "patiently" for the returns. One of the things Woodford was offering there was exposure to smaller listed and unlisted companies along with a liquidity pool from a more traditional larger portfolio.

I'm well aware of the contradiction with WPCT, however I'm coming round to the idea that there are more capable and experienced specialist managers / vehicles in the tech investment space. I'll probably keep hold of WPCT, it's a small percent of the total and it's certainly not impatience that's driving my thoughts on ditching it.

I just have a growing gut feeling that Woodford is winging it at WPCT, given recent events, at least at this stage, and that other managers are far more established and grounded in this particular sphere. In truth I just don't know.

I've spent a bit of time looking at the robotic index ETF you've described in the last few days but decided it probably won't have anything much by way of an advantage over the likes of SMT etc although it does look interesting.

Agriculture is something else I've considered, although I have strong objections to the likes of monsanto and their monopolistic frankenseed enterprise, other than that it's all a bit fuzzy, hence the post.

BRFI is a reasonable candidate, I already hold this but it fits in here quite well too I think.

Mining I also hold elsewhere, although I'm not sure about it fitting this longer term. It's a bit too cyclical.

cheers all.

BrockStoker

I'm also on the lookout for similar funds. Here's one that caught my eye some time ago which might interest you:

https://www.trustnet.com/Factsheets/tnuk/FactSheet.aspx?fundCode=I9FV4&univ=T

I also think clean/renewable energy funds could be worth a look, or at least keep an eye on the sector for a few months.

I'm waiting for a correction (pretty much inevitable soon I think) before I buy any PCT and some robotics/automation. Also looking into a "smart materials" fund:
http://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F000003Z9K

I think any way you cut it, these sectors should do well over the mid-long term. The pace of change in tech is changing, and gathering steam. I'm not sure there is a president for what is happening in the sector (or any sector in the past), and the pace at which things are now changing.

For example, in the last few hours Harvard researchers announced that they had managed to produce metallic hydrogen, which it's believed is a room temp. super conductor. If this is true, it's BIG news, and will likely lead to a revolution in technology. Computing power will go up exponentially, and we will likely get answers to other long standing problems/mysteries which in turn will lead to further revolutions.

The pace is not likely to slow down here, unlike other industries in the past (which is why I say there is no president for what is going on - just look at the the growth of companies like google), because new tech advances are starting to spawn further new advances in turn, at an ever increasing rate due to our computing power primarily.

Human kind is hungry for these advances, especially as they have been promised but denied to us for so long... but that is not an argument to say that they won't be sooner rather than later.

Along with biotech/healthcare, some energy/oil, generalist small/mid cap funds and a couple of geographic specialist funds, the other tech/specialist funds will make up the rest of my portfolio, and I will always keep at least a bit of cash on hand in case of opportunities