Trustnet Magazine Issue 24 December 2016 | Page 24

IN FOCUS

/ SECTOR PROFILE /

THE UK

FOR WHAT
IT’S WORTH…

THE BURNING ISSUE WHEN
IT COMES TO THE PROSPECTS
FOR THE UK next year is the one
hanging over from 2016, namely
Brexit. While the government
is expected to trigger Article 50
as early as spring, Alex Crooke,
manager of the Bankers Investment
Trust, says this will only be the start
of the discussions.
“In the absence of being sure we
will get any Brexit resolution, the
uncertainty it has created is likely to
persist,” he said.
“However, this has not stopped
corporates putting money on the
ground, so it looks like they are
unperturbed by it and the hope is
this carries on.”

Another potential headwind is
inflation, which could reach as high
as 4.5 per cent. Crooke says this
is likely to act as a headwind for
consumer spending which makes
him cautious on UK domestic
stocks. As a result, he has taken
the UK weighting of the globalmandated Bankers trust down
from 40 per cent to 27 per cent over
the past year and says this could
drop even lower. His favoured
sectors include life insurance
and financials, while he also says
housebuilders represent good value
given their high dividend yields.
“We think the Office for Budget
Responsibility’s recent 1.7 per cent
GDP forecast for 2017 is optimistic,”

he said. “Instead, 1 per cent would be
a good outcome and while we don’t
think there will be a recession, we
do think tough times are ahead.”
The Winterflood view: Kieran
Drake, a research analyst at
Winterflood Investment Trusts,
says: “Given the movements
in markets we have seen since
Trump’s election, rising bond
yields and a recent sell-off in
bond proxies, a trust that adopts
a contrarian bias could benefit.
As such, within the UK, a trust
we would highlight at present
is Alastair Mundy’s Temple Bar
Investment Trust.”

Few analysts got all the big calls right this year, but Brexit and Donald
Trump will give them some major clues to how 2017 pans out,
writes Adam Lewis

F

OR ALL THAT THE EVENTS OF 2016
TOOK EVERYONE BY SURPRISE,
Trustnet Magazine’s 12-month outlook
published this time last year wasn’t too
wide of the mark. While no one made a
call on Donald Trump or Brexit, Rathbones’ David
Coombs predicted a “difficult and volatile year” but
backed the US to outperform, Henderson’s James de
Bunsen named emerging markets as a sector that
22

presented some interesting opportunities and
Chelsea Financial Services’ Darius McDermott
highlighted oil and commodity stocks as potential
value plays. They didn’t get everything right, of
course – you can see what they had to say here.
Looking ahead, 2017 looks set to carry on providing
surprises. With this in mind, we gaze into the proverbial
crystal ball to see what the experts think will happen next
year and how this will affect their investment decisions.
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