Peter Sharkey: diary of a share punter
PUBLISHED: 11:15 02 March 2011 | UPDATED: 08:03 08 March 2011
Virtually every married couple establishes unwritten rules which evolve gradually over the years. Most blokes, for example, are shooed out of the kitchen when they're doing no more than standing around and getting in the way, often with the express instruction to go and pour the chef another glass of wine. I'm told I follow this request rather well.
The same rules extend across the domestic landscape and embrace everything from temporary possession of the TV remote control to laptop usage. Until a couple of months ago, we possessed just a single laptop, but as our respective use of the same expanded, so the need for a second became apparent.
How did we cope before the internet? Train tickets are booked and groceries delivered to the front door, while an eclectic collection of CDs and books are bought online. Only last night, the new queen of the internet (aka Mrs S), mused: “What a great company Amazon is. It sells everything.” Indeed, much of Amazon’s product line regularly appears to find a way to our house and, given the company’s latest results, which revealed sales growth of 36pc for the final quarter of 2010, I assume the same is true for millions of other UK households.
Amazon has enjoyed spectacular growth over the past 12 months, its share price rising by more than 50pc, from $121 to $186. In 2006, the company’s turnover was $10.7bn; last year, it was $34.2bn. Over the same period, net profits have risen from $190m to $1.14bn.
As I mentioned the other week, buying US shares is simple and cheap (Amazon’s can be bought for $7), but in case the company’s growth stutters, many investors’ preferred method of owning a slice of the Seattle-based outfit is via an investment fund.
One of the UK’s most popular funds is the Scottish Mortgage Investment Trust, founded in 1909. Part of its present popularity can be attributed to the significant growth in its share price over the past 12 months, but investors are undoubtedly attracted by the fund’s dividend record. Only once, at the depth of the Depression in 1933, has the SMIT dividend been cut. Since then, it’s either been maintained or increased.
It also happens that Amazon accounts for the largest proportion of SMIT’s investment portfolio, currently around 7pc, but the trust has what many investors searching for global growth believe is the ideal portfolio mix.
With 30pc of the £2.4bn fund invested in North America, 19pc each in Europe and Asia and 10pc in the UK, the Scottish Mortgage Investment Trust continues to cover all bases. Aside from Amazon, it holds stakes in Banco Santander, the Deere Corporation and a host of other well-known companies.
It’s an unwritten rule for thousands of investors seeking returns from global equities that considering SMIT as part of their portfolio mix makes enormous sense.
See Peter’s blog at www.mymoney24.co.uk