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Holly's Blog: Shopping sprees before the New Tax Year

11 July, 2017

Two days left until the tax year end and activity amongst DIY investors is rife. Let’s have a look at what you’re up to.

Apparently it’s Friday. I wonder if in three weeks’ time we’ll stop using days of the week, as beards grow (not mine yet!), use of washing powder decreases and children’s home schooling standards drop from set Maths tests to a mere basic avoidance of savagery!

Two days left until the tax year end and activity amongst DIY investors is rife. Let’s have a look at what you’re up to.

Who is buying what?

Investment platform Interactive Investor reports that 8 out of 10 of its best-selling funds are passive. This reinforces what you told us a few weeks ago – most of our readers were planning to buy the dips, and using passive ‘tracker’ funds to get broad exposure to markets was the preferred approach.

FTSE 100 trackers feature heavily in buying activity on this platform – the sixth most bought fund is the Vanguard FTSE UK All Share Index, with HSBC FTSE 100 Index in 8th place, followed by Fidelity Index UK in 9th then the Vanguard FTSE 100 Index Unit Trust. The most bought funds are Fundsmith Equity (a rare ‘active’ entry) and Vanguard LifeStrategy 80% Equity (a mixed bag of global investments).

Scottish Mortgage remains the most bought investment trust. I own this one. I think of it like the blue jeans of my portfolio. Nicely Boring. Comfortable. Been in the wardrobe for ages. Quite cheap. Astonishingly only down 10% over the last month. (The investment trust, not my jeans ha ha stop it!)

And shares? Victims – or great opportunities?

It’s Blue Chip City as investors look at solid names which are in some cases more than 40% cheaper than they were just a month ago. Of course many in retirement or approaching this, look to their investments for income as well as growth. Those shares which pay out nice dividends (regular little cash payouts which share a company’s spoils with shareholders) have been popular but WARNING lots of these dividends have been cancelled as cash becomes King and companies hang on to it.

As for best-sellers, Richard Hunter, Head of Markets at Interactive Investor report shares “Three banks make the top ten (Lloyds Banking, Barclays and the Royal Bank of Scotland), none of which will be paying dividends in the immediate future…GlaxoSmithKline is set to maintain its dividend, there is a possibility that Aviva and Legal & General may do the same (although regulatory pressure could yet come to bear) and the oil majors in the form of BP and Shell have announced stringent cost reduction measures without specifically referring to the dividend.” Watch this space.

Another example of the ‘victim’ or ‘opportunity’ debate with FTSE stalwarts is builder Persimmon which has been shutting sites, cancelled its dividend and is down by 43% in one month. It’s a strong buy from many brokers but it’s a concentrated risk. Even the strongest balance sheets will get battered over time. And of course “how long will this go on for?” is the question that no-one can confidently answer today.

So what to do?

It’s hard to believe that this is the bottom. The job losses are starting to bite and economies are being starved of both demand and supply. But on the basis that no-one knows what to predict with any certainty, for most of us it’s (sort of) business as usual when investing – keep using your tax wrappers, drip feed in, and don’t try and be a hero and make big bets on individual stocks or investments. Funds spread your risk around and help us to diversify – so important right now.

I do question the logic of adopting passive funds at this time. They are a very efficient and cheap way to access a broad market or sector. And they remove the anxiety of stock selection. But this broad brush ‘little bit of everything’ approach makes more sense when life is normal and things are quietly chugging away, collectively obediently strolling towards the top right-hand corner of a graph. However right now there are very stark cases of winners and losers. Now feels like a time to take a more concentrated approach and I’m currently reviewing the funds I have, adding more sustainable and concentrated funds to the mix, and switching out of some of the passives.

Platform AJ Bell Youinvest reports a pick up in buying of some more concentrated funds. The Jupiter UK Special Situations fund, which aims to unearth troubled companies that have seen share price falls and are poised to rebound, has reportedly been popular. The fund lost 20% in March alone, as its underlying holdings have been hammered by market falls. But for patient investors who think the stocks will rebound it could be an example of some of the interesting opportunities out there. The broker also reports strong buying of other concentrated, buy-and-hold funds, Fundsmith Equity, Lindsell Train Global Equity and Lindsell Train UK Equity.

Here’s what I think is sensible.

  • If you can – use the tax allowances offered by ISAs and SIPPs (DIY pensions)

  • You can put money into a stocks and shares ISA ( but leave it sitting inside this tax sheltered account as cash if you want ie no need to rush and select investments

  • You can take money out of a stocks & shares ISA later on with no penalty so it’s worth putting any spare cash into the wrapper, even if you’re uncertain about cashflow in the short to medium term

  • Our Best Buys tables ( will help you pick a good one

  • It’s hard to think about pensions right now but don’t forget most of us have a huge £40,000 annual allowance - and contributions bag us a freebie Government top up too (tax relief (

  • Try not to opt out of your workplace pension – if you do, you also lose the employer contributions which are effectively free money

  • Now is not a time for heroics – you are very probably not a gifted Wall Street trader so don’t get carried away!

  • Drip feeding in is a sensible approach at times of such volatility – just check your platform doesn’t charge for fund trades – or if they do, check these are low amounts for recurring or regular instructions

  • Be careful if you are switching – with markets yo-yoing by up to 5% a day, even one day out of the markets when you sell one fund, and then buy into another, could be very bad news

  • Despite what I have said about passive funds (, they are undoubtedly an easy simple and cheap way to be invested without swagger – they remain a perfectly good way to invest for broad brush exposure, especially if you are less confident

It’s been a challenging week on the home front. Yesterday at 1.50pm I was charging around like a blue-@rsed fly, trying to set my daughter up with a Darcey Bussell dance video, prepping the ingredients so my son could make his first ever curry without using sharp knives, and get onto a work conference call with a client. I’ve never before found myself panic-dicing an onion with 30 seconds to go before a client call, to buy myself an hour of uninterrupted time! The joys.

Have a great ‘weekend’ everyone. I’m going to cut the grass. That is my activity and treat! As is a renewed love affair with Tunnock’s Tea Cakes. #smallpleasures