Kevin Goldstein-Jackson: Looking on the fright side

It is too early for me to be satisfied with the 2009 performance of my self-invested personal pension (Sipp), as I am still concerned about what might happen “behind closed doors” over the Christmas period when stock markets are shut.

Will politicians, regulators and bureaucrats discuss the full extent (not so far revealed) of international financial problems? Do they have long-term, genuine solutions?

Some predictions for 2010 are now pointing to a “hung Parliament” in the UK – or predicting that the winning party will have such a small majority that it will take ages of bargaining before anything gets done.

Soothsayers also point out that the Chinese Year of the Tiger begins in 2010 and that Tiger years have been known for periods of war and major unrest: 1914, 1938/39, 1950. All these speculations could lead to some see-sawing of share prices in the last trading days of 2009 – so I will try to stay alert for investment opportunities.

Wild swings in share prices might also persuade more people to invest in precious metals, so the gold price could rise further. This would be good news for my Sipp’s holding in Avocet Mining – especially if Avocet’s recently acquired Inata project in Burkina Faso progresses on, or ahead of, schedule, as the “first gold pour” from the mine is expected before the end of January.

Another small company with interesting prospects is main-market listed City of London Group (COLG) – not to be confused with Aim-listed City of London Investment Group.

COLG used to own a small public relations division, as well as maintaining a wide-ranging investment portfolio. But the PR division was sold in December 2007 and, since then, the company’s principal activity has been running its investment portfolio.

One of COLG’s subsidiaries is Fundamental Tracker Investment Management (FTIM), which runs the Munro Fund. This fund differs from a conventional tracker fund in that it invests in companies according to their gross cash dividends, rather than their market capitalisations. According to FTIM, studies have shown that the bulk of equity returns comes from reinvested dividends rather than capital growth.

On November 11, COLG announced the appointment of a new management team – led by Eric Anstee as chief executive – with the aim of exploiting “opportunities in the financial services field as the economy recovers”.

Anstee is currently a non-executive director with the Financial Reporting Council, Insight Asset Management, Paypoint plc and serves on the Takeover Panel Appeals Board. He has been chief financial officer of three FTSE 100 companies – Old Mutual, The Energy Group and Eastern Electricity – and, at all three, he worked with the second member of the new COLG team, John Kent. Trevor Hanham, a highly experienced manager with considerable experience of telecommunications with BT, is the third member of the new team. Given these appointments, I have made a modest increase in my Sipp’s holding of COLG.

Kevin Goldstein-Jackson is an active private investor writing about his own investments. He may have a financial interest in any of the companies and trading strategies mentioned.