Trustnet Magazine Issue 46 December 2018 | Page 38

In focus
dragged down by Brexit
uncertainties.”
Paul Niven, manager
of the F&C Investment
Trust, says that even
though the UK looks
cheap at present, it
is likely to remain so
even if there is a “good”
Brexit outcome.
“Brexit uncertainty
is set to persist and we
think that the UK is in a
lose-lose situation right
now,” he explains.
“Even if there is
perceived to be a good
Brexit outcome, this
would lead to a rise in
the strength of sterling
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which would be bad
for large caps given
their overseas earnings
exposure. Nonetheless,
we only have around 5
per cent of the portfolio
in UK assets so we do
benefit from falls in
the domestic currency.
We also have sterling
borrowings and, to
mitigate the potential
risk of a rise in sterling
(which would hit the
value of our overseas
holdings) we have
started to add some
sterling currency
exposure rather than
UK equities.”
The fund-
buyer view
Ben Yearsley, director
at Shore Financial
Planning, plumps
for Alastair Mundy’s
Temple Bar investment
trust, describing it as
a value and special
situations play on
the UK. “Mundy likes
buying unloved stocks
when those selling are
at their most irrational,”
he says. “UK domestic
stocks are a current big
position as many have
been shunning these in
the run-up to Brexit.”
The US
The US represented a healthy
portion of the F&C Investment Trust
in 2018, totaling 53 per cent of the
portfolio. However, while manager
Paul Niven does not expect to reduce
this weighting going into 2019, he
has begun balancing his exposure to
growth and value companies.
“The strong performance of the
FAANGs and growth stocks has led to
a large gap in the valuations compared
with value stocks,” he says. “As a result,
we have levelled out our exposure to
growth and value as we believe that as
we become later-cycle, rising interest
rates should start to become supportive
to areas beyond the FAANGs.”
This more balanced approach in
the US, Niven says, is reflected in his
weighting to financials, healthcare
and energy stocks.
The fund-buyer view
“Finding a US fund or trust
that consistently outperforms is
difficult so I usually look elsewhere
for US exposure,” says Yearsley.
“Technology is often where I end
up, as these funds have a large US
weighting. While the sector has
had a poor couple or months, prior
to that it had been on a charge for
many years. I’m still a believer in
tech for the long term as it’s integral
to everyday life. Polar Capital
Technology Trust is the way I would
play it: it currently has 70 per cent
invested in the US in names such as
Microsoft, Apple and Alphabet.”
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