We must be pragmatic on this and view UK equities over the long haul. There are major international earners, resilient UK small and mid-caps and leading dividend payers all heavily discounted due to this uncertainty.
Pessimists would say we have been talking about these discounted valuations since 2016, but the fact is they remain prominent. The game has changed, investors should not expect dramatic returns over three years, but these aforementioned benefits should be felt by those patient enough to hold UK equities for the next decade at this entry point.
Three funds to consider
Rock solid income and exposure to FTSE 100
1. Artemis Income: This fund has been a stalwart of the UK equity income sector for more than 15 years. Managers Adrian Frost, Nick Shenton and Andy Marsh focus their analysis on a company’s cash flows and how this will drive future dividends.
The stocks they will buy will have a strong franchise and offer a unique product or service. Meeting management is also an essential part of the process.
The fund, which is predominantly large-cap in focus, is an ideal all-weather fund that has consistently done its job over a long period.
The multi-cap option
2. ISFL Marlborough Multi-Cap Growth: Richard Hallett invests in the UK’s leading growth businesses, irrespective of size. He initially identifies long-term structural growth trends and then invests in the strongest market-leading businesses benefitting from them.
Despite the fund’s excellent long-term performance, it has gone under the radar of most investors. With a concentrated portfolio of 50 holdings, the portfolio has benefitted from its growth investing style, though this has become a headwind more recently.
The value play
3. JOHCM UK Dynamic: Having run this fund since 2008, manager Alex Savvides’ process is all about corporate change as he scours the market for undervalued companies that are making positive improvements to their businesses.
Savvides has historically held several mega-caps, which he says are often overlooked by other investors. We view him as a top UK manager with an excellent track record, despite facing some style headwinds.
Darius McDermott is managing director of Chelsea Financial Services & FundCalibre
