Out with the new, in with the old. That is my personal finance motto for this year and I am sticking to it.
The view of a cussed middle-aged man (and aren’t they just despised at the moment)? Not at all. I have never been happier – despite the recent death of one of my teenage heroes, footballer Cyrille Regis, at the far too young age of 59.
My view is based on the fact that in financial services we are often encouraged to jettison the old in favour of the latest ‘fashion’. Progress, it is called, but this is not always necessarily the case. "Luddite," I hear you cry from your pristine offices. No way. Hear me out.
We are told: out with traditional banking and bank branches in favour of internet and mobile banking – even though swathes of the country suffer from poor internet reception. And of course many people, especially the elderly and small cash-generative businesses, either have no wish to go online or need a branch counter to hand over their takings.
We are also constantly told to switch investment funds in order to chase the latest investment fad. Remember technology funds in the late 1990s, when every fund broker was urging every man, woman and dog to buy a technology fund inside an Isa? How many of those funds are still around today? A handful at the most.
Shop around
The same goes for insurance – switch every year if you want to drive down the cost of your motor or home cover, rather than stay put. Most insurers treat loyalty with contempt, and discourage it – both from a customer and business point of view. The switching tide is in part driven by the price comparison websites, as revealed in a very good Money Box investigation on BBC Radio 4 during the festive period. If you missed the show, do catch it on iPlayer – 30 minutes of good journalism.
And of course we are now being encouraged to jettison face-to-face financial advice in favour of robo-advisers. Not for me in a million years. I want to look my adviser in the eyes and get to trust them. I do not want an algorithm deciding my financial fate.
It is against this backdrop that I recently attended a dinner to mark the 150th anniversary of Foreign & Colonial, a £3bn investment trust which has been doing the rounds for a lot longer than most entities in the financial services world. A low-key event for financial journalists in the bowels of the Malmaison Hotel in London’s Clerkenwell, but thoroughly enjoyable.
The trust, now managed competently by Paul Niven of BMO Global Asset Management, has survived every financial and market crisis that has come its way. And of course it has managed to stay afloat during two bloody world wars.
Although its management and board might disagree, Foreign & Colonial is low‑key in most things it does. It does not shout its message from the rooftops. Nor is it backed by high‑profile marketing. It just gets on with delivering sound investment returns for shareholders by quietly and modestly investing in a global basket of equities, without attracting or seeking attention. There is nothing brash or sexy about it. Undersold, underbought, it is the proverbial quiet one in the class – rather than the show‑off – who always ends up getting the best exam grades.
Indeed, you would probably not even know that the trust has increased its annual dividend for 46 consecutive years. A comfort to shareholders who use it to complement their incomes. Tell me, how many equity income investment funds (Oeics or unit trusts) have increased their income payouts every year for the past 46? None.
Continued growth
Foreign & Colonial is not unique, nor is it special. There are a number of other investment trusts which have also stood the test of time, in the process building equally impressive investment records – in some cases even better – and delivering long periods of dividend growth. Indeed, a handful of them – City of London, Bankers, Alliance and Caledonia – have racked up more than 50 years of continued growth in annual dividends.
Yet Foreign & Colonial is a lesson to all those who deride the tried and tested. The trust has survived because it has never lost sight of the objective it laid down when launching in 1868. That is, to bring stock market investing to those of moderate means. It has done this with aplomb throughout, and I hope it will continue to do so under the management of Mr Niven and the watchful chairmanship of Simon Fraser.
So while all the noise in financial services is currently about automation (God forbid), spare a moment to acknowledge the various personal finance nuts and bolts that have kept working effectively for many a year.
Yes, I am all for progress, but let us hold on to the things and funds that have stood the test of time and are proven to work. Let’s not embark on change for change's sake.
I raise a glass to Foreign & Colonial Investment Trust on its 150th anniversary. May it survive another 150 – although of course I will not be around to applaud its continued success, unless cryogenics has come on in leaps and bounds by then.
Jeff Prestridge is personal finance editor of the Mail on Sunday
