Over the past 12 months we have profiled a number of investment clubs across the UK, talking to them about their investment strategies and what measures they have taken to underpin their portfolios since the credit crunch took hold.

So how have these strategies turned out in practice? With hindsight, the period since the run on Northern Rock ushered in the credit crunch has proved to be the most turbulent for investors in living memory.

As a result, the approaches adopted by some investment clubs have literally been tested to destruction, while others have seen their strategies vindicated in  a volatile stock market.

Mursley Investment Club – Bargain hunting
Justin Willett, treasurer of the Mursley Investment Club, responds that, ‘The past year has made me feel glad I am in a club where the decisions and investments are shared. It is easier investing sums like £1,000 when it is done in a group, and in these times it gives you more protection.’

The members of this club, which was formed in June 2006, believe that, due to the current economic situation, there are many bargains to be had. For example, they recently purchased shares in Marks & Spencer for £2, and so far that has performed well for them.

Willett reports, ‘We are slightly down over the two and a half years we have been together. However, we remain quite bullish towards the market and believe that there are good buying opportunities to be had. The markets are volatile at the moment, but that just means we have to be smarter and more careful investors and get better at picking our stocks.’

Wiser investors
The members of Mursley Investment Club have definitely learnt from their mistakes. ‘We bought shares in Northern Rock when it was £1.75 and when it reached £2.70 we had a discussion about whether to sell. In the end we didn’t do anything, and unfortunately it went down to £1.40. We took it on the chin, learnt our lesson, and are monitoring the sector now.’

But they haven’t written off financials just yet, having bought shares in HSBC and Barclays with the view that they both offer long-term value. He adds, ‘We have always had a strategy to make fairly quick money, and if we don’t see an upside in a share within the first three to four months, it is probably not for us. We think the building sector is one to watch at the moment and are keeping our eye on Barratt Homes and Taylor Wimpey.’

He explains that the club now uses more automated stop losses: ‘We try to buy low and sell high, but the hardest thing is knowing when to sell.’

GOW Investment Club – In for the long term
But even with a few more years’ experience, the current volatile markets can easily make an impact on a club’s portfolio. Geraldine Puxty, founder of the GOW Investment Club, says, ‘We are about five per cent down on this time last year and our strategy has changed. We were going to set up a stop loss at ten per cent either way, but decided to have the flexibility of being free to make our own buy and sell decisions as the market was changing so drastically.’

She adds, ‘We are holding onto our stocks as we are in it for the long term and have decided it is not worth selling – despite our treasurer wanting to sell everything!’

GOW Investment Club has been established for four years and is made up of ten female members, based in and around Buckinghamshire. The club hasn’t altered its strategy too much and has kept most of its holdings, but that doesn’t mean they aren’t on the hunt for the next bargain. ‘We are still in the same sectors as we were previously and have holdings in Primark, Carluccio’s, The Share Centre, Balfour Beattie and Lloyds, but we are still buying because it is a good time and we have found that a lot of shares are much cheaper than they were this time last year.

‘We have recently bought into the mining sector, despite it taking a recent hit, because we think there is value there. We have also invested in utilities with water companies,’ comments Puxty.

Best Investment Club – Watching the market
GOW, like many other clubs, is also keeping a close eye on the banking sector, and Peter Holman, chairman of Best Investment Club, profiled a few months ago in What Investment, agrees that it is one area to watch.

He reports that ‘We are keenly watching the banking sector. Previously we held shares in Barclays and Lloyds TSB and have sold these, but one of our members is a former Lloyds employee, so is keeping an extra watch on them, and on the sector as a whole.’

Best Investment Club was formed seven years ago by a number of people who belonged to the University of the Third Age, and despite the rocky times, have not been doing too badly. Holman adds, ‘We have held our own over the past few months and have made money on Aviva and Petrofac. In fact, we sold Petrofac at around 600p a share and then bought back into it at 520p, a strategy we have used for a number of our investments.’

Safety first
However, the volatile markets have caused the members of Best Investment club to play it safe. ‘At the moment, it is a case of sitting with our fingers crossed, but we think we are better equipped now to handle difficult market conditions than we were previously,’ explains Holman.

‘Each of our members has a sector to manage and we pick two shares from each sector, with a view to holding a maximum of ten shares in our overall portfolio at any one time.’
He adds that being a member of an investment club can help investors survive the most difficult times: ‘With the markets being so volatile, you really are better equipped to do well in difficult trading conditions if you invest as part of a club. I know this is the case when compared to my own investment portfolio.’

Holman points out, ‘We finally got round to instigating a stop-loss limit. We are not messing around at the moment! All of our members have access to The Share Centre’s expert advice, and I have called the investment advisers a number of times to discuss particular investment opportunities.’

Best Investment Club, like many that we have encountered over the past 12 months, still sees the property market as a risky investment, but one that may surprise investors at some point.

Holman confirms, ‘We are still not in the property sector, but are following Telford Homes – a previous investment – very closely. We think they will do well off the back of the 2012 Olympics as they have a holding in East London.’

Quidsin Investment Club – A focus on small-caps
And one club in particular, despite opting to cut back on trading over the past few months, has started to concentrate more on smaller stocks. Stephen Barry of Quidsin Investment Club explains, ‘One of our members has taken on the main buying and selling from me, and we have started investing in smaller stocks with some success. About half of our holdings are now in AIM-listed companies.

‘The sectors we are currently focused on are gold and platinum. We have also invested in small oil companies and alternative energy providers, and some of these have done really well for us.’ Barry does, however, point out that, despite having some successes, their portfolio has gone down a bit since the credit crunch took its toll.

Quidsin Investment Club was formed a decade ago and over the years has slimmed down but, according to Barry, having a smaller number of members makes investing much more simple: ‘We now have seven members, which we find makes decision-making on shares a lot easier.’

Making it work
Being part of an investment club may seem like a lot of hard work, especially when faced with such volatile markets.

However, one of the most important aspects of being part of a club is the social side of things. Most clubs meet up once a month, discuss their investment strategy and any potential stocks, and enjoy a drink, perhaps a meal, and a general catch-up.

And for those clubs that have members in far-away places, this can make all the difference. ‘As our club has been together for so long,’ explains Barry, ‘some of our members have moved around the country, and one of them even lives in the US.
The members now mainly communicate via email and we get together for a drink every three months or so.’

New Millionaires Club – Still having fun
And Geoff Hilton of the New Millionaires Club, which has been around since 1997, agrees that the social activities are important in bringing a club together when its investments are not faring so well.  

He argues that ‘It is at times like these that you appreciate just how important the social side of being in an investment club is.

‘We have realised over the last few months that the main reason we are in an investment club is to meet up, have a beer, a bit of fun and a gossip!’