UK Edition
Managing your own portfolio is not for everyone and many prefer to leave it to the professionals. Not Lena Birse, a mother of two from Bristol. She decided to take matters into her own hands after her husband, Jim, sold his renewable energy heating company in 2012, giving the couple a sizeable amount to invest.
She said: “When we sold the company and put all our money in the stock market, I knew from day one it was going to be my full-time job. We thought we were better off doing things ourselves – no one has our interests at heart more than us.”
In 2014, Mrs Birse moved some of their wealth to eToro, a trading website that gives investors the option to copy other people’s portfolios or create their own. Initially she joined as a copier, but now more than 2,000 people imitate her portfolio, which means she influences how more than £1m of other people’s money is invested.
She earns commission when people copy her ideas. It has not all been a smooth ride, however. When Mrs Birse started she invested in large British stocks that paid a dividend, as she wanted to withdraw an income of 3pc each year to live on. After less than a year, however, she changed her strategy drastically.
“I was dazzled by high dividends to start with. Then I remember shares in First Group [the transport company] falling by 30pc shortly after I invested because it cut its payout,” she said.
Overall, her portfolio had barely moved after eight months and Mrs Birse decided to switch to American technology stocks, whose returns she described as “life changing”.
This meant a switch from seeking dividends to owning fast-growing businesses and taking income in the form of share price gains.
“We realised that we couldn’t time the market, especially with technology stocks, which can be volatile,” she said. “So we shut our eyes and looked again at our account six months later. We could not believe the returns.”
She originally invested in large companies such as Apple, Amazon and Microsoft, which remain among her largest holdings. After she watched these companies grow, however, Mrs Birse felt they were starting to stall.
“I could see that there was a point at which the larger stocks were not growing as fast as they had been in the early days,” she said.
Since then, she has slowly been taking more risks on lesser-known names, which has been crucial for the portfolio’s success. “I learned that investing is not just about something you buy and hold and forget about. If you want the portfolio to work, to the maximum, you have to keep finding new stocks,” she said.
Her most recent buy is DocuSign, an American company whose software allows people to sign documents electronically. Since the start of the year its share price has more than doubled as lockdowns have forced people to work from home and rely more on technology.
“I am now looking at stocks that will do well in this new world we are moving into after Covid-19. For me, DocuSign makes sense. It is so much more convenient for people [than having to print documents],” Mrs Birse said.
She invests a small amount at first, allowing the position size to grow naturally as the company’s share price rises and investing more when stocks prove they can sustain their earnings.
Mrs Birse learnt to do this the hard way after a costly error with 3D Systems, a printing company. Impressed with its technology, she piled in, only for the share price to slide. She eventually sold at a loss.
Her strategy has paid off in recent years. Last year the portfolio gained 47pc and so far in 2020 she has made 52pc. It is this performance that has led to a flood of new investors who copy her decisions.
However, to keep those investors onside she said communication was vital, something she had learned from watching fund managers fail during the financial crisis.
“We have used fund managers in the past but we looked closer at what they were charging, and realised we had little understanding what they were doing,” she said.
She regularly replies to comments on eToro as well as on her Instagram account and has recently set up a YouTube channel.
Mrs Birse mainly trades using fractional shares. But eToro is best known for using “contracts for difference”. Three quarters of eToro retail investors using CFDs made a loss.