While my other portfolios contain far more safe and steady holdings, I’ve long used my Stocks and Shares ISA as the vehicle for my more ‘risky’ investments.
Today, I’m divulging my top three positions as things stand.
Rocky ride
The third-biggest holding is soon-to-be nickel producer Horizonte Minerals (LSE: HZM).
The reason this undeniably risky stock features so prominently is that my initial investment has grown considerably in value as a result of positive news flow from its Araguaia project in Brazil.
Should I take some profit? It’s crossed my mind. After all, metal prices are notoriously volatile. Moreover, any unforeseen building issue(s) could send Horizonte’s shares plummeting.
On the flip side, I’m comforted by the progress to date. Only yesterday, the £400m-cap revealed that construction was both on time and on budget — no small feat.
Although nothing can be guaranteed, I suspect (hope) that Horizonte’s assets will eventually be snapped up. My money is on FTSE 100 juggernaut Glencore. It already owns a near-18% stake.
Regardless, I’m bullish on the price of nickel considering it looks set to play a key role in the green energy revolution.
So yes, this is white-knuckle stuff. But the reward might be worth it.
Safety in numbers
My second largest Stocks and Shares ISA holding is, again, one that will only appeal to those with strong stomachs.
The Liontrust UK Micro Cap Fund is devoted to investing in some of our smallest companies. Unfortunately, these are often the first to be discarded in times of trouble, making their share prices very volatile.
On a positive note, countless research papers have shown that buying tiddlers over giants can deliver better returns over the long term. That last bit is key.
Fortunately, my Foolish nature means I’m in no rush. This inevitably means riding out periods of market malaise, such as the one happening right now.
Importantly, the Liontrust team is also very experienced and has a track record of delivering (see the performance of the older UK Smaller Companies Fund for evidence of this). This goes some way to justifying the admittedly high fees.
With the UK small-cap market looking seriously good value, I plan to continue adding.
Out of favour… for now
Top spot goes to one of the most hated members of the FTSE 100, namely Scottish Mortgage Investment Trust (LSE: SMT).
The Baillie-Gifford fund has been one of the most publicised casualties of the last year or so, mostly due to its commitment to investing in disruptive growth stocks.
When interest rates gallop higher, these are the companies that people don’t want to own because the payoff comes later down the line (if it comes at all).
So why do I remain bullish? Primarily, I think we’re near the bottom of the cycle. If and when rates stabilise (or perhaps even fall), I reckon we could see investors flooding back.
SMT’s managers also have a good track record. Despite falling 28% or so in the last 12 months, the trust is still up 36% since 2018. By comparison, the FTSE 100 has climbed just 5%.
At just 0.32%, the ongoing charge is also very competitive.
Collectively, these reasons are why I’m throwing as much cash as I can spare at this trust right now.
