The pound could rally to pre-referendum levels over the coming months, injecting fresh momentum for UK stocks and bolstering UK economic activity.
This is the view of Nigel Green, the founder and chief executive of global financial adviser deVere Group, despite Brexit outcomes remaining ‘up in the air.’
Green’s believes that the longer the Brexit process takes the closer the final relationship between the UK and the EU will be, implying some form of ‘soft Brexit.’
TRIPLE-WHAMMY
When that comes investors are advised to be on the watch for a rally in the pound, UK stocks and a spurt in economic activity as sidelined household and business spending kicks in.
This view is increasingly shared by many investment experts.
‘It might be counter-intuitive to think that the UK market could be among the top performers globally in the year that we leave the EU (if indeed we do). But markets have a way of confounding expectations and surprising the consensus.’
That was the opinion of Alex Wright back in November 2018, fund manager of investment trust Fidelity Special Values (FSV).
In this Shares feature late last year, he at the time expressed his confidence that clarification in the relationship between the UK and EU would act as a catalyst for investors to revisit the UK equity market.
Paul Mumford, a fund manager at Cavendish Asset Management, also thought that there would be a ‘good chance’ for UK domestic earning companies to bounce on the stock market in 2019.
PROMISING START
The signs so far in 2019 are encouraging for UK stock markets. At the current 7,445.72 the benchmark FTSE 100 index has rallied 10.7% already this year.
How can UK investors position themselves to enjoy these implied bumper returns, should they come to pass? Equity income funds are one route, providing growth and dividends from a wide selection of UK companies.
Here are five of the most popular with UK investors, based on users of the AJ Bell Youinvest Platform:
| Name | Sector | Fund mgrs' charge | 3 yr return | Yield |
| Man GLG UK Income Professional Inc
| UK equity income | 0.90% | 13.4% | 5.25% |
| TB Evenlode Income Inc
| UK equity income | 0.90% | 13.3% | 3.26% |
| Montanaro UK Income Inc
| UK equity income | 0.86% | 9.82% | 3.58% |
| Threadneedle UK Equity Income Inc
| UK equity income | 0.83% | 7.73% | 4.20% |
| Troy Trojan Income Inc
| UK equity income | 0.87% | 6.23% | 4.27% |
