Six investment themes more important than Brexit

Six investment themes more important than Brexit

The threat of Brexit might be looming on the horizon and dominating headlines, but investment experts revealed the themes they think are more important than the European Union referendum.

1. Trumped up

David Coombs, head of multi-asset portfolios at Rathbones, cited Donald Trump’s presidential campaign as a prominant theme.

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“Donald Trump’s extreme views have garnered him condemnation and support, in equal measure.

“He started the race as the court jester, but has the electorate become the joke here?” he said, suggesting the intolerance around immigration is not confined to Mr Trump.

Mr Coombs said the rise of more extreme politics is a real threat to the stability of economies, adding: “After years of centrist ideologies, radical policies are now formenting at both ends of the political spectrum.”

2. Powder-puff policy

Sheldon MacDonald, senior investment manager at Architas, pointed to “ineffectual moves” by central bankers - and called for bolder fiscal policy to lift inflation.

“After seven years of unconventional policy aimed at saving the global banking system, central bankers are still cranking the same growth levers, namely quantitative easing and low or negative interest rates.”

Mr MacDonald said the central bank chiefs “can proclaim their willingness to act with no limits to boost inflation as loudly as they like”, but said the markets “are no longer listening to those perceived to be ‘crying wolf’”.

“As such now might be the time we need governments to step in with strong fiscal policy measures instead.”

3. China sneezing

Ben Lofthouse, fund manager of Henderson International Income trust, said the health of the Chinese economy is a “major concern” for investors, particularly the impact this might have on its currency.

“Chinese assets are not widely held by investors, but Chinese economic growth is one of the major drivers of global growth rates and it is the major customer for commodity suppliers.

“So certainly if China sneezes, the rest of the world is likely to feel the impact, and perhaps even get a cold.”

4. FTSE 100

Nick Peters, portfolio manager at Fidelity Solutions, said one investment theme competing for influence with Brexit is the FTSE 100 stocks, which he suggested will prove longer lasting.

“We are seeing a rotation not so much from growth to value companies, but within the value sector itself.

“So while oil companies and commodity exporters were favoured value plays in anticipation of higher commodity prices, we’re now seeing areas like banks becoming favoured value stocks.

5. Efficient energy

Richard Stone, The Share Centre’s chief executive, said energy and natural resources are broader investment themes to consider.

“Concerns about climate change remain, and with the increased capabilities of mobile technologies, mobility of populations and changing working patterns, we are demanding more and more from our devices and machines.

“Companies who can lead the technological change will benefit from these ongoing trends.