Direct Debit Investment Ideas

James Thomson is one of only a few global fund managers to have shown they can pick great companies and perform better than the broad global stock market over the long term. We think he has the potential to repeat this success in future, although there are no guarantees. Past performance isn’t a guide to the future.

Thomson mainly focuses on innovative companies with high-growth potential that tend to do better when markets are rising. But he also invests in some companies that could grow their earnings at a steadier rate, which could hold up better when markets wobble, and avoids those that are overly complicated. He likes companies where a positive catalyst, such as a change in management, will eventually get noticed by other investors and boost their share prices.

Rather than using extensive quantitative tools, Thomson uses a combination of their experience and internal and external analysts to generate ideas. This helps build a 360 degree view of the company through a range of lenses. He does have the flexibility to invest in smaller companies and emerging markets which can add risk. At the moment Thomson mainly invests in developed markets, such as the US, UK and Europe.

We think this fund could be used to provide some growth potential to a more conservative portfolio or provide diversification to a portfolio of bonds.

Sebastian Lyon likes to keep things simple. He aims to shelter investors’ wealth just as much as grow it. Rather than trying to shoot the lights out, the trust aims to grow investors’ money steadily over the long run, while limiting losses when markets fall. It tries to experience less ups and downs than the broader global stock market or a portfolio that’s mainly invested in shares.

The trust is focused around four ‘pillars’. The first contains large, established companies Lyon thinks can grow sustainably over the long run, and endure tough economic conditions.

The second pillar is made from bonds, including US index-linked bonds, which could shelter investors if inflation rises.

Some of the fund is also invested in traditional UK government bonds (gilts). The third pillar consists of gold-related investments, including physical gold, which often acts as a safe haven during times of uncertainty. The final pillar is ‘cash’. This provides important shelter when markets stumble, but also a chance to invest in other assets quickly when opportunities arise.

Lyon has tended to focus on companies based in developed markets, such as the US and UK. This includes some of the world’s best-known companies with highly recognisable brands.

We think the Trust could form the foundation of a broad investment portfolio, bring some stability to a more adventurous portfolio, or provide some long-term growth potential to a more conservative portfolio.

Please note this trust has the flexibility to invest in smaller companies and operate a concentrated portfolio, both of which add risk if used.

You should be aware that investment trusts can trade at a discount or premium to net asset value (NAV). These trusts can also borrow money to invest with the intention of increasing returns (sometimes known as gearing) which increases risk. They are also able to use derivatives which if used are higher-risk.

The Vanguard S&P 500 UCITS ETF offers a low-cost solution for tracking the performance of the S&P 500 index. The index is widely regarded as the best gauge of the performance of large US companies and features household names like Apple, Microsoft, Amazon and Tesla. It does this by investing in every company, and in line with each company’s index weight. This is known as full replication and can help the fund track the index very closely. To help keep these costs down, the team aims to make large investments in companies instead of lots of small transactions.

ETFs that focus on the larger US companies could be used to diversify a long-term global investment portfolio, including those focused on other regions such as the UK, Europe or emerging markets, or one focused on smaller companies. As this fund is listed offshore investors are not usually entitled to compensation from the UK Financial Services Compensation Scheme.

For this ETF, Vanguard will lend some of the investments in the ETF to other providers in exchange for a fee, which can reduce the costs for investors, though this adds risk. They will only lend securities to a limited number of approved dealers. They also indemnify the fund against any loss from this process, meaning there should be no negative impact on investors.