Month: December 2016

Wellcome inspiration: a 10 point checklist

FIRE v London4 Comments

The Wellcome Trust caught the news this week. Its claims to fame this year include:

  • It is the world’s second biggest charity (behind Bill & Melinda Gates).
  • It has donated over £1bn last year.
  • Its boss, Danny Truell, is the UK’s highest earner in the charity sector. His pay rose £1m to £3m last year on the back of excellent five year investment returns.

Continued outstanding performance

I first studied the Wellcome Trust in 2012. At that point it had about £14bn under management, and about 20 investment professionals.

The Trust has just posted strong investment returns of 19pc, takings its assets up £3.5bn to £20bn. Managed by 25 people.  I’d say its boss is earning his pay.

Last year’s excellent results were largely because the Trust made an strategic decision about a year ago to downweight its sterling exposure. Apparently normally it wants at least 25pc UK exposure, but sometime pre-referendum it decided to waive that requirement. Its assessment was that the Brexit risks were asymmetric, with much greater downside than upside. This was a very similar perspective to my own call in January this year, which has served me very well too. I’d love to know how exactly they implemented the shifts involved as it isn’t easy to do without trading costs.

The fund has compounded over 15% since 1985.  This is astonishing performance, of a Buffett-beating level. Over time the Trust has consistently outperformed the market, without running extra risk.

A Wellcome Trust 10 point scorecard

My assessment of the Trust highlights 10 characteristics it follows. Many of them I share, but not all.  These ten points are as follows (apologies if you’re reading this on a smartphone!): Continue reading “Wellcome inspiration: a 10 point checklist” →

Injuring private bankers’ wealth

FIRE v London9 Comments

This post is a follow-up to my September post – how private bankers injure your wealth.

I recounted how I was rather horrified/shame-faced to analyse the fees I’ve been paying one of my private banks for far too long. When you considered the double layer of fees due to my ‘fund of funds’, I was paying around 2.05% for a discretionary portfolio.   And the performance didn’t in any way justify this level of fees.

I had some very useful comments about my predicament.  The gist was that I should try to negotiate.  Perhaps I could even offer to introduce some total suckers very daft friends to the service. The commenters included people, like me, who do value the service from a private bank and who empathised with my intention to keep the relationship live – albeit at a lower cost base than before.

So, what happened next?

I confronted my bank with my analysis.  I suspect they were thinking ‘what took him so long?’ because they were ready for me.  And, no, they haven’t fired me yet – unlike the other private bank in my portfolio.

It turns out they are all too happy to stop managing discretionary portfolios manually, and they have an alternative approach.  Continue reading “Injuring private bankers’ wealth” →

My performance in Nov ’16 – Trump!

FIRE v London1 Comment

Trump won.  Already, less than a month in, it has a somewhat inevitable feel to it.  After Brexit I don’t think I can be shocked by politics any more, but from a market-watchers’ perspective the reverberations haven’t all been what I expected.

I had thought the USD would fall a bit.  It hasn’t.  Well, OK, it fell about 2.8% versus Sterling but it’s up against the Euro and the Aussie.

I had thought US equity markets would fall (from protectionism, policy freefall, etc) but in the shower the next morning the biggest driver seemed to be Trump’s seeming determination to reduce US corporation taxes to 15%; the subsequent market rally suggests I’m not the only person focusing on the impact this could have on equity valuations.

I hadn’t really thought about bonds.  But of course (hah! Ed.) with Trump suggesting a massive increase in the US fiscal deficit and national debt, along with a potential infrastructure boom, interest rates are on the way up.  The US bond indices fell almost 3% in the month, the third month in a row that bonds have fallen in the UK and the US.  UK bonds, which account for 20% of my target weighting, are down almost 9% since August; this alone has hit my portfolio by about 2% over the last three months. But let we become too fussed by end-of-the-bond-bubble chatter, bonds are still up during the year.

2016-11-returns-by-asset Continue reading “My performance in Nov ’16 – Trump!” →