Money and Media - Communications, Connections, Comments

Concentrate hard to achieve a decent return

It’s the middle of January and I’m still reading items by investment experts telling me which markets to pile into during 2014 and those to swerve (in the same way as if you’d just received an invitation to appear on Benefits Street).

As stock market watchers and lovers of index funds will know the Footsie 100 index, that bellwether of the UK’s blue chip stocks, rose by just over 14pc last year. That was its strongest performance since 2009.

In stock market terms 14pc is a fairly beefy return. If you’re more familiar with having a punt on a sporting event, however, it represents the same level of success as backing a six-to-one ON shot. That’s Frankel territory if you remember the champion racehorse who had such a superlative season on the flat two years ago.

As we’re still in the season of predictions, and JUST FOR A BIT OF FUN, here’s how I’d structure a notional £1,000 portfolio with the aim of producing a return in excess of 20pc this year.

Rather than plumping for stock market selections, I’ve picked events which will take place in 2014. The odds quoted are the current, fixed-priced returns available from a range of well-known bookmakers. The prices were accurate on Thursday 16 January 2014 care of that useful website

  • £500 Scotland to vote ‘No’ to independence at 1/5 (Coral, William Hill)
  • £220 12 Years A Slave to win Best Picture at the Oscars at 4/11 (Stan James)
  • £100 Manchester City to win the 2013/14 Barclays Premier League at 11/10 (Betfred)
  • £100 Russia to win the most number of medals at the 2014 Winter Olympics at 13/8 (generally available)
  • £60 Brazil to win the 2014 Fifa World Cup at 100/30 (SkyBet)
  • £20 Argentina to win the 2014 Fifa World Cup at 5/1 (Coral)

As portfolios go it’s definitely what investment strategists would describe as ‘concentrated’ with plenty of ‘core’, not much ‘satellite’ and more than an element of risk about it.

There’s some method in the madness as well. Only last week that bank for the well-heeled, Coutts, revealed that passion investments such as classic cars have trumped shares over the last decade. I wouldn’t recognise a Bugatti from a Bentley, but I do know that any winnings to come back from the selections above are returned tax-free.

So let battle commence. Win, lose or draw, I promise to report back in December. Of course, if any money editor should want me to pit my wits against a more conventional range of City professionals in the interim then all they have to do is get in touch…