‘Can Fundsmith and Baillie Gifford make me a millionaire?’

Taking the reins of a pension pot for the first time – and setting a clear return target – is a brave thing to do.

Olly Scott, 43, from Oxford, took the plunge in July this year, switching his £175,000 pension po t out of tracker funds chosen by his pension provider and into a broker account with Interactive Investor to manage himself.

He owns 25 investments, ranging from actively managed funds to specialist passive strategies and investment trusts, which earn an income from song royalties. So far his portfolio has risen 4pc, but he is hoping for much more: his aim, with 25 years until retirement, is for his pot to reach £1m, while adding around £14,000 a year to it.

“The goal is simple: to actively manage the portfolio once or twice a year and build a substantial pot to fund my retirement,” he said.

“The fund choices are there to grow my money via the stock-picking prowess of Baillie Gifford and Fundsmith, as well as to back British businesses. I also hold around 15pc in stocks, which I think will do well, such as payments group Wise and cyber security firm Darktrace.”

Mr Scott, who works in public relations, wants an expert review of his portfolio to check that he stands a chance of meeting his goal. He also has about £13,000 in cash ready to invest and is looking for fund ideas.

Rob Morgan Pensions and investment analyst at Charles Stanley

For Mr Scott to meet his return target, his portfolio needs to make about 6pc a year to get to £1m in today’s terms once inflation is taken into account. That seems possible, but demands a fairly high level of risk.

He is on the right track, however, with almost all the portfolio invested in stocks, with some diversification via property funds and “alternatives”, such as an investment trust that owns music royalties. However, one area that Mr Scott has invested in, but could be bolstered, is smaller companies funds, which can uncover hidden stock market gems.

BlackRock Throgmorton Trust, which invests in small British stocks, is a good option. It comes with the benefit of being able to borrow to increase returns, albeit at the expense of heavier losses when markets are falling. BlackRock Smaller Companies Trust is an alternative and invests in even smaller companies.

His portfolio could also be more balanced with regards to investment style and spread more evenly between funds. One fifth is invested in Fundsmith Equity, which buys fast- growing companies. Some of this could be moved into stocks that are cheap but due a recovery, such as those held by Schroder Recovery.

I’d also advocate some exposure to emerging markets, which is noticeably absent save for a bit within the Scottish Mortgage and Monks investment trusts, both run by Baillie Gifford. Buying Stewart Investors Asia Pacific Sustainability would help address this.

Investment director at Quilter Cheviot Mr Scott’s portfolio is heavily skewed towards fast-growing companies, such as those owned by Fundsmith Equity and the various Baillie Gifford funds, and could do with being more balanced. If interest rates start to rise, these “growth” shares would be likely to fall and his portfolio would lag the market.

Shares in banks, however, would do well. Mr Scott should consider adding some of these by buying the Polar Capital Global Financials Trust. It owns Bank of America and JP Morgan alongside payments companies such as PayPal and Mastercard.

Smaller and medium-sized companies, including private firms, make up around a quarter of his portfolio. While smaller firms have historically performed better than their larger counterparts, there is no guarantee that this trend will continue. It would be sensible to reduce this allocation over the next few years and certainly as retirement approaches.

Given his annual contributions, retiring with £ 1m would require a yearly return of less than 4pc after fees; though this final pot would buy less than £1m would today. This target could well be achieved with a more balanced portfolio. I suggest he looks into a “lifestyling” approach, which means he reduces his stock market risk as he nears retirement. Sam Benstead