Since the mid 90’s I have taken advantage of those lovely tax-free stock purchase shelters PEPs & ISAs. The PEP was originally brought in by Nigel Lawson in 1987 at a time when his soon to be domestic goddess daughter Nigella was 27 and you could buy a pint of Abbot Ale for 70p.The original allowance or limit was a measly £2400 which increased over the years reaching £9000 when Norman Lamount added in the £3000 single company PEP. In 1999, our Gordon replaced the PEP with his ISA concept with a cap of £7000. In 2004, our Gordon is feeling a touch mean and decides that ISA and PEP managers are no longer allowed to reclaim the 10% tax credit attached to dividends. This leaves ISA investors £10.00 worse off for every £100.00 gross dividend paid.
Progress has been made bit by bit and the allowance this year is, of course, £15,240 for the current financial year.
Whilst I am more than happy to self-select my own stocks within the bulk of my investments, I do like a class act when I see one and for the two years, 2013 and 2015 invested my allowance with the classy Fundsmith. Now as I have mentioned before on this blog, Fundsmith is run by Terry Smith the man whose book Accounting for Growth published in the early 90’s blew the lid on accountancy fiddles that massaged earnings for some companies.
Fundsmith invests in equities on a global basis. The Company's approach is to be a long-term investor in its chosen stocks. It will not adopt short-term trading strategies.
The Company has stringent investment criteria which the investment manager adheres to in selecting securities for the Company's investment portfolio. These criteria aim to ensure that the Company invests in:
Since inception on 1/10/2011 the fund has increased in value from 100p to the price at the time of writing 222p and outstripped the FTSE 100 total return somewhat which would have converted your 100p into 122p, so you can see my concept of a few £k in a lazy money fund operated by a high quality manager.
The fund has performed very well for me but it is boring and although I do like boring, this one is exceptionally boring even by my standards. I will therefore probably leave the ISA contributions at the current two years worth with reasonable confidence that if I totally cock up other investments myself, which I don’t plan to do, then I will have a few bob to buy my season ticket at Luton Town: told you I like boring!
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