Few investors will be sorry to see the back of 2018. Markets were skittish and, with the exception of a few lucky technology investors, most people will find their portfolios a few per cent lower on the year.
On the face of it, 2019 doesn’t hold a lot of excitement for investors either. In the UK, Brexit looms, while the US and China continue their spat over trade, and in Continental Europe, Italy looks potentially disruptive. Having said that, markets have fallen, so investors have the equivalent of a Black Friday moment where they are getting shares at a bigger discount. This doesn’t mean they can’t fall further, only that they are cheaper than they were.
Also, stock and bond markets are not homogenous. Different types of company perform better or worse in certain economic conditions. As such, there are ways to still invest in stock markets, but not take the full force of any market falls. At the same time, areas such as gold march to a completely different tune and can do well in the darkest of dark times.
With this in mind, we gather the thoughts of the investment industry on the best places to put your capital in the year ahead:
Lindsell Train UK Equity Fund: Managed by Nick Train, this fund aims to capitalise on global consumer brands; owners of media or software intellectual and capital market proxies. The fund looks for undervalued, profitable companies whose brands and market positions allow them to ‘offer something truly unique.’ Companies such as Unilever and Diageo make up one fifth of the fund.
Investec Global Gold Fund: Gold-related investments could also add a further element of stability. One way of doing this is to invest around five per cent into a gold fund, such as the Investec Global Gold Fund. This fund provides exposure to gold via a diversified portfolio of gold mining company shares.
Merian UK Alpha – Manager Richard Buxton is a traditional contrarian investor buying unloved stocks and waiting for the market to change its view. He builds a concentrated portfolio and takes high conviction positions in sectors which are undergoing structural change. Buxton takes aggressive positions in the portfolio and uses his macroeconomic outlook to lead investment ideas.
Baillie Gifford Global Alpha Growth - The managers target companies that offer sustainable above-average earnings and cash flow growth prospects. The team relies on bottom-up, fundamental research and favours companies with competitive advantages, superior business models, strong financials, good management and attractive valuations. The managers' approach is patient, so once they buy they tend to hold on for the long term, so investors should expect turnover to be low.
Janus Henderson UK Absolute Return - Finding cautious areas to invest over the next 12 months may well prove to be challenging, particularly with corporate bonds remaining unappealing. Equally, UK equities may well be challenging given Brexit issues and, as a result, the flexible approach of the Janus Henderson UK Absolute Return Fund could be useful. With the ability to move both long and short, it’ll be especially useful if equity markets continue their recent volatility into next year – protecting capital may be a greater consideration than outright growth. If that is the case, managers Luke Newman and Ben Wallace have proven before that they have the skillset to profit when markets become difficult.
Polar Capital Global Insurance - Insurance never sounds like the most exciting of investment ideas but in many ways that’s precisely the appeal. It’s a sector that often goes under the radar but insurance companies have a fantastic ability to generate cash regardless of the economic environment, as we all know through our ever-increasing insurance premiums! Polar Capital Global Insurance is highly unusual in focusing on this area, but they are experts in this specialist field and this comes through in the quality of management.
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