Small-cap investment trusts may be the best way to gain exposure.
Whether the UK will leave the European Union is uncertain, nor is it clear whether any exit will be on the basis of a negotiated withdrawal bill with the EU.
However, anyone who thinks that leaving with some sort of a deal is a possibility should look at investment trusts with exposure to UK smaller and mid-cap companies, says Stifel.
"These companies tend to be in sectors which are relatively highly focused on domestic companies, notably sectors such as housebuilders and leisure and entertainment," says the financial services company.
According to Stifel, the performance of the FTSE 250 is heavily correlated with the likelihood of a no-deal Brexit. The broker argues that the index saw its biggest falls in August, as shown on the graph below, when talk of a no-deal Brexit reached its peak.
It continues: "We have also noted that on days when there has been newsflow suggesting a deal may be possible, many of the UK-focused companies such as the housebuilders have seen their share prices move up sharply.
"The reverse has been true when there has been newsflow suggesting a deal is less likely. This suggests that this segment of the market is likely to remain volatile in the next few weeks, but if a deal is done, there may be scope for a significant re-rating."
In that scenario, Stifel says that small-cap investment trusts may be the best way to gain exposure, with funds in the UK Smaller Companies sector having a high exposure to the index.
For a trust with a tilt towards value stocks, the broker names Aberforth Smaller Companies (LSE:ASL). Meanwhile, investors looking for a trust trading on a desirable discount could look at Mercantile (LSE:MRC), currently trading on a 10% discount from its NAV and with about three-quarters of its portfolio in FTSE 250 companies.
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