Imagine you’ve been given the choice of investing in three companies. You can choose one of two batches with the intention of holding them for at least five years.

The first batch features a rat catcher, a provider of emergency telephones for lifts and a trucking company carrying small loads across the US. Sounds boring, right?

The second batch features an American cruise line operator. You also get the owner of brands loved by young and old including Yankee Candle and Sharpie pens, and a fashion seller which generated $6.2 billion revenue in 2022.

I would wager that more people would choose the second trio of stocks over the first batch. They all sound exciting – many are likely to have used their products and services, and that familiarity means investors might feel more comfortable owning a slice of these businesses.

Unfortunately, if you had picked batch two a decade ago, you would be holding a trio of duds. Each one of these three companies has lost money for investors over that period.

The leisure group is Norwegian Cruise Line (NCLH:NYSE), which has delivered a 7.5% negative annualised total return (share price gains/losses and dividends) on a 10-year basis, according to SharePad data. The Sharpie owner is Newell Brands (NWL:NASDAQ) which would have lost you 4.7% a year over that decade-long period and the fashion group is Ralph Lauren (RL:NYSE) with 3.3% negative annualised return.

In contrast, batch one features the winners. On a 10-year view, the trucking company is Old Dominion Freight Line (ODFL:NASDAQ) which has achieved 27.4% annualised total return. The rat catcher is Rentokil (RTO) with a 22% annual gain and the emergency phone group is Halma (HLMA), which boasts a 17.5% annual gain.

This is the perfect illustration that boring is beautiful when it comes to investing. While the three ‘winners’ all trade on premium valuations, that is a recognition of the strong returns they’ve generated over the years.

Think of some of the other boring names to have made investors rich over the years, such as Bunzl (BNZL) which supplies things that companies need to do business but do not actually sell to customers – think takeaway cups for coffee shops or clean door mats for hotels and offices.

Too many investors automatically flock to companies with a good narrative, thinking that is the ticket to easy returns. Space as an investing theme is a good example. We’re all fascinated by the opportunities with space, but how many of the relevant companies make any money? As a bellwether for the sector, note that Seraphim Space Investment Trust (SSIT) is down 60% in value since it joined the stock market in 2021.

Often it can pay to put your money into something more mundane, whether that’s companies which fix blocked drains or make widgets to keep factories running.

Exchange-traded fund providers have been scrambling over themselves to launch thematic ETFs which track hot themes. But they’re missing a trick.

I’d be the first in line to buy a ‘boring companies’ ETF, yet such a product still doesn’t exist. Sadly, the ETF industry would no doubt argue it would be too hard to market. What a shame.

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