What a Tory majority means for your investments
Following the election result overnight, Darius McDermott, managing director of FundCalibre, gives his take on what a Tory majority could mean for our investments.
“A majority government is exactly the result Boris Johnson was hoping for. He will now have more freedom to negotiate with the European Union, and a softer Brexit could be on the cards – but at least finally in sight.
“The UK stock market is likely to rally now, as will the pound, as confidence returns. Domestic-facing businesses and smaller companies in particular should do well.
“In contrast, the larger overseas earners in the FTSE 100 may suffer a little due to the currency reversal. However, this may be mitigated in time by overseas investors returning to our shores and once again investing more broadly in the UK stock market.
“There is a lot still to be done in terms of the final trade deal, but we at least now have a clearer path, and a sense of purpose, so British companies can operate with less of a cloud hanging over their futures.”
Some funds and trusts that investors may like to consider are:
Fidelity Special Values
Managed by Alex Wright, this trust is a prime candidate for value investors looking to tap into the unloved UK market. A contrarian investor, Alex targets companies which are exceptionally undervalued as a way of preserving capital as well as those where he feels there is a catalyst for growth in earnings. These catalysts can take many forms, such as a change in economic conditions or a change in management.
LF Tellworth UK Smaller Companies
This fund is run by two managers with an exceptional track record of investing in UK smaller companies. Paul Marriage and John Warren look for companies with a differentiated product, high margins, company management aligned with shareholders, and a market leading position. These companies will make up 75% of the portfolio, with the remainder allocated to value opportunities, like self-help stories.
LF Gresham House UK Micro Cap
This fund leverages off a wider team of some 50 investment professionals to take advantage of its private equity expertise to invest in some truly unexplored areas of the market. The fund invests in around 50 very small companies and manager Ken Wotton will hold successful investments as they grow in the future. Ken also avoids high-risk sectors such as oil, mining and property.
This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions.
Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice.
Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.
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