The four UK funds we own and might keep buying
Saltydog analyst reveals his post-election investment plan and funds he’ll buy once sterling settles.
16th December 2019 13:30
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Saltydog analyst reveals his post-election investment plan and funds he’ll buy once sterling settles.
Stepping back into the markets
Last week we made quite a few changes to our portfolios ahead of the General Election.
We were concerned that if a Conservative government was formed with a working majority, the value of sterling could continue to strengthen against the US dollar. This would be bad news for funds invested overseas, and so we reduced or sold anything which we thought might be affected.
When Boris Johnson was first elected as Prime Minister, at the end of July, sterling was on a downward trend and at levels that we hadn’t seen since just after the EU referendum in 2016. Since then we’ve seen a strong recovery.
The pound spent most of last week trading between $1.31 and $1.32, having risen from a low of around $1.20 in September.
On Friday, it briefly went above $1.35, when the scale of the Tory victory became apparent. It has subsequently dropped back to $1.33 / $1.34.
We also thought that funds investing in the UK may benefit and that has certainly been the case.
In our portfolios we are holding the following funds from the UK All Companies and UK Smaller Companies funds.
Allianz UK Opportunities, Franklin UK Mid Cap, Artemis UK Smaller Companies and Franklin UK Smaller Companies
They’ve been performing well over the last few months and each had a strong uplift on Friday. The Franklin UK Mid Cap fund went up by 5.5%!
So, what next?
It looks like the UK Small Companies and UK All Companies funds could be in for a good run, so we'll be looking to increase our holdings in these funds.
At the moment it feels a little too early to tell what is going to happen to sterling. Is it quickly going to go back up to $1.35 and then keep rising, or is it going to settle around $1.33? We'll wait and see what happens over the next few days.
As soon as it shows signs of stabilising we anticipate going back into the Global and Technology funds.
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These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
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