Rathbones Boss Suggests Model Portfolio Perfect For Millennials Starting to Invest

Possibly the hardest part of investing online in an investment portfolio is simply taking the initial step to get started. We’ve covered on numerous occasions on this website why starting to invest as early as possible, even if the sums young millennials are able to initially put aside might seem measly and barely worth the effort. The way that investments of a few hundred pounds in companies such as Apple, Alphabet and Amazon 10, 15 or 20 years ago would now be worth tens of thousands shows that even a tiny nest egg can grow into a golden egg.

And if for those who aren’t lucky or foresighted enough to strike gold with a young company destined to grow into one of the biggest in the world, the experience and habits that starting to invest early leads to, even if sums are very modest, will prove invaluable. The regular ‘How to Invest £10,000’ column for The Times asks investment experts for advice on where to invest a starting £10,000 for a new portfolio. The most recent edition featured Evangelos Assimakos, investment director at Rathbones Investment Management, and his suggestion of a starting portfolio that would particularly appeal to millennials investing online for the first time.

The £10,000 portfolio focuses on ethical investing, which, according to a recent survey conducted by Rathbones, is a key consideration for almost a third of millennials, who want to see evidence their investments are compatible with their moral compass before handing over money. That compares with just 7% of the older 55-64 demographic. The £10,000 component to the headline also shouldn’t put off those investing online for the first time who don’t have so much to begin with. Whatever is available can be invested in the way suggested by Mr Assimakos, and topped up over the months or years to reach £10,000.

He suggests splitting the investment equally between five funds which he explains as selected because:

“The portfolio takes into consideration the importance of sustainability and the environment, while remaining growth-oriented overall. Some of the funds focus on backing start-up companies and small firms that could be the next Apple or Amazon, or discovering gems in emerging markets”.

Impax Environment Markets, up 16.2% over the past year, is the first pick of the five. An early investor in the renewable energy sector, Impax Environment has interests in diversified sectors across areas like waste management, logistics and food safety as well as renewable energy. It has a very good track record and charges an annual management fee of 1.39% above any investment platform costs.

Marlborough Special Situations, up 12% over the past year, is next up. This fund is focused on smaller UK-listed companies with strong growth potential. The fund’s manager, Giles Hargreave, has been uncovering the kind of smaller, high-growth gems often neglected by bigger funds for over 40 years now and has an outstanding record in doing so. The average management fee is also very reasonable for an actively managed fund at 0.99%.

Jupiter European, up 20% in the last year, is the third pick of the three but not by any means in order of merit. The focus is on European-based companies with strong growth potential and includes well-known names such as Adidas and Deutsche Borse, which manages, among others, the Frankfurt Stock Exchange and was recently planning to merge with the London Stock Exchange before regulatory demands scuppered the deal. The annual fee is 1.12%.

RWC Emerging Markets is number four. Despite losing 10% over the past 12 months, Mr Assimakos focuses on its longer term average track record. The 10% loss is also much better the MSCI emerging markets benchmark index, which has dropped 20% this year. Long term, however, companies in emerging markets are coming from a much lower base and from economies that are forecast to grow much faster than those in developed markets over the next decade or two. The fund’s analysts speak 18 languages and run a fine tooth comb through emerging markets around the world to uncover their hidden winners. The management fee is 1.73% per annum.

Scottish Mortgage Investment Trust, up 24.8% for 12 months, is the final pick of the five. By Baillie Gifford, this fund has exposure to start-ups and smaller companies with huge promise in sectors which are often at the cutting edge of new technology. Examples include companies involved in electric vehicles, music streaming and the development of new materials made from synthetic spider silk! And having been among the early backers of Amazon and Tesla, the management behind the fund clearly have an eye for a good idea. The management fee is also good at 0.98%.