UK funds to snap up as Brexit beckons

UK funds to snap up as Brexit beckons

UK equities trade at such depressed valuations as a result of Brexit uncertainty they now represent value, according to Simon Evan-Cook, multi-asset fund manager at Premier.

Sentiment towards emerging market and UK equities was in the doldrums for much of 2018, but Mr Evan-Cook views this as an “opportunity”.

Mr Evan-Cook revealed he has been buying more UK equities, via equity funds. He said: "Everyone is very negative about the UK because of Brexit. But Brexit won't affect every company, and there are plenty of good companies that won't be affected by Brexit, and those are an opportunity.

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"We have been increasing our exposure to UK shares.

Among the mandates run by Mr Evan-Cook is the £200m Premier Multi-Asset Global Growth fund.

The largest asset allocation weighting in this fund is to UK equities with 16 per cent of the capital allocated to the domestic market.

Among the funds he has invested in to gain this domestic exposure are Evenlode Income, which is run by Hugh Yarrow, and Man GLG Undervalued Assets, which is run by Henry Dixon. 

The £1bn Man GLG fund has returned 50 per cent over the past five years, compared with 28 per cent for the average fund in the IA UK All Companies sector in the same time period.

The largest investments in the fund are HSBC and Shell.

There is exposure to the UK domestic economy via investments in housebuilding company Bellway and property business St Modwen. 

The £2.5bn Evenlode Income fund was the second best performer from 239 funds in the IA UK All Companies sector in the 2018 calendar year.

The UK domestic economy is represented by exposure to Compass. 

The Premier Multi-Asset Global Income fund has as its largest investment the Franklin UK Equity Income fund. The largest investments in this fund are Shell, BP and Glaxo. 

"Emerging markets got to the maximum hate stage last year, where every single investor who wanted to sell them had done so.

"That is often a good time to buy. In addition, the potential for US interest rates to rise at a slower pace than has previously been expected is positive for emerging markets."

Guy Stephens, technical investment director at wealth manager Rowan Dartington, said: “It is very easy for an investor to get spooked by the Brexit shenanigans, decide that perhaps their risk appetite isn't what they thought it was, panic, and run for the security of cash.  

"No matter how much the financial advice industry advises clients to take a long term view and ignore the short-term noise, this is very difficult when the media are having a field day and catastrophising constantly.  Do you believe or ignore the theory behind Project Fear?

"This could equally apply to the election of a Corbyn government. Would it really be as bad as many believe? At the end of the day, the UK is still projected to grow GDP at 1.5 per cent in 2019 from 1.4 per cent in 2018 – hardly supportive of the intensity of the forecasts of our impending doom."