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Taking Stock

Our quarterly investment trust magazine.

Countdown to Brexit

Back in July 2016 we woke up the morning after the EU Referendum to the shock news that the Leavers had it, an unexpected outcome that had an immediate impact on UK and European markets and the relative strength of the pound. Bank of England Governor Mark Carney stepped in to calm investor nerves. Prime Minister David Cameron quickly stood down.

It felt like, and in many ways was, a seismic moment in the political history of Europe. Now, as 2019 approaches, the reality of Brexit moves ever closer.

That’s why investing through uncertainty is the prevailing theme explored by our expert contributors in this issue. Here they look at the potential implications of Brexit over the longer-term. In the overall scheme of things for investors, how significant is this? And what are the threats and opportunities it might bring.

Highlights:

  • Brexit? Why we see opportunity in UK smaller companies – Jonathan Brown and Robin West of Invesco are clear on the short to medium term challenges Brexit may present, but they also argue that, for the patient, long-term investor, it has the potential to provide particular opportunities for those interested in smaller company investment.
  • The Brexit journey – James McCafferty of Alliance Trust Savings helps us regain perspective by taking a step back from the daily Brexit news twists and turns to look at the big-picture journey we’re on to leaving the EU. From its start to expected finish.
  • UK market ripe for stock pickers – Milena Mileva of Baillie Gifford explains why she has no time for the Brexit doomsayers, instead maintaining focus on exciting British businesses that have the strengths to drive their vision forward over the longer-term, whatever the political and economic context may be.
  • Finding opportunity in uncertainty – Different businesses will respond to Brexit in different ways and macropolitical events should not drive stock-picking decisions. This is the firm view of the team at BlackRock, who see now as a time of genuine opportunity for investors to find good value, high-quality UK company stocks.
  • Stock selection is key to outperformance, not second-guessing macro trends – For Craig Baker of Willis Towers Watson, understanding the potential impact of macro-events like Brexit is important, but primarily about risk management. Painstaking, fundamental research into business models, industry dynamics and company specific-factors always comes first.
  • Brexit: An investor’s guide – At the time of going to press, investors are still largely uncertain as to how the UK’s trade relationship with the EU will look after 29 March 2019. Alliance Trust Savings’ Sara Wilson considers the facts and how, under the circumstances, investors might position themselves.
  • Protecting a portfolio in difficult markets: challenging your assumptions – Louise Kernohan of Aberdeen Asset Managers outlines why she believes investors can no longer rely on old rules of thumb for a resilient portfolio in the face of events like Brexit. Quality is important, but it must come at a reasonable price and with genuine prospects for growth.

Please remember the value of your investments and any income from them can go down as well as up and you may get back less than the amount you originally invested.

Investment Trusts may borrow to finance further investment (gearing) . The use of gearing is likely to lead to volatility in the Net Asset Value (NAV) meaning that a small movement, down or up, in the value of a Trusts assets will result in a magnified movement, in the same direction, of that NAV. This may mean that you could get back nothing at all.

If you are unsure if a particular Investment Trust is suitable for you, you should seek independent financial advice making making any investment decision

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Alliance Trust Savings Limited is a subsidiary of Alliance Trust PLC and is registered in Scotland No. SC 98767, registered office, PO Box 164, 8 West Marketgait, Dundee DD1 9YP; is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, firm reference number 116115. Alliance Trust Savings gives no financial or investment advice.