Money: My favourite investment - From the Square Mile to a rural idyll

Tips each month from a City expert
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The Independent Online
Theodora Zemek is a fixed-interest and corporate bond specialist. She has been with M&G since 1992 and is now responsible for its Corporate Bond and High Yield Corporate Bond Funds. The latter invests in sub-investment grade company loan stocks, sometimes unflatteringly referred to as junk bonds.

Theodora Zemek finds that at the end of a day at M&G in the City of London: "There's nothing more boring than to think of some sexy stock or other that will make my fortune."

That said, she still finds the time to plan her future. And this involves her most recent and now favourite investment. This is a large lump of clay and a pile of rubble. No, she's not an after-hours sculptor. The pile of very old stones and the clay are sitting on a plot of land in Provence where she and her husband are going to build a home.

"My life's ambition has been to retire relatively young so that I can become a lady of leisure and do lots of creative things," she explains.

Having failed to find a "Renaissance folly" in the region, she bought some land and has embarked on having one built for her.

"It will have a tower, vaulted corridors, everything. I am always combing antique shops for old doors and flooring, cornerstones and so on," she adds. "We plan to have it finished by the summer next year. Like any old- fashioned investment, we don't plan to sell it."

To finance her ambition, Ms Zemek has sold some shares in her second favourite investment, M&G itself. She first bought into the company when she joined it seven years ago after a colleague persuaded her that it was a good long-term investment.

She started buying the shares when they were 540p each. Last year was the first time that she sold any, and by then they had risen to pounds 17.50p.

"So I swapped some to buy my bit of clay: the asset that I'm truly in love with," she says.

Ms Zemek had investments before joining M&G but these were short-term holdings.

Her first was an inheritance of $200 (pounds 125) worth of shares in a company called the Midland Ontario Grain Elevator, a mid-Western American agricultural company. She sold these soon after she started university. Otherwise, her other investments have been in the rash of privatisations over the past decade.

"I viewed these as a way to make quick killings, making enough of a profit to carpet my present house. It was only when I joined M&G that I found out about the value of investing for the long term," she says.

Looking to the future, and leaving aside the chateau in France, she advises an investment in her own High Yield Corporate Bond. This was launched last October just after the summer shake-out in the stock and gilt markets.

"These bonds tend to outperform when the companies are doing well and interest rates have steadied or continue to fall," she says.

"We have a strong investment philosophy and sense of values, so we are not after just the highest yields. Call them sub-investment grade, junk bonds or whatever, but we believe many of these high-yielding bonds are trading at too low a price. We look at the overall picture, not just the credit risk.

"Anyway, it is very rare for one of these companies to go belly up. Those companies that have reneged on their corporate loans in recent times, such as Barings, would have been categorised as being of good investment grade at the time.

"Now our fund is top of the league tables, having given a total return of some 13 per cent since we floated it. The fund has grown very quickly - it's now worth more than pounds 170m. You could say I'm very chuffed, especially as many in the industry said it couldn't be done."


n Aged 43.

n Brought up in Chicago. Studied philosophy and French history at Yale, then moved to Cambridge to do a BA and PhD in history.

n While working on her thesis, she supported herself by being a barmaid and usherette in a theatre - "the most management experience I ever had", she says.

n When she realised she did not want to be an academic, she joined what was then called Lehman Bros in London in 1982 as a bond saleswoman, before moving into fund management with James Capel. After she was made redundant, when the latter was restructured by HSBC, its parent company, she joined M&G in 1992.

n Hired to look after M&G's fixed-interest and gilts portfolio then valued at pounds 500m, she now has a team of five people who are responsible for investments worth pounds 3.5bn.

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