Give your pension a Brexit boost from the falling pound

The falling value of the pound has dealt a blow to holidaymakers, who have found that ice creams and meals out in europe and the U.S. are more expensive this summer.

For each £100 you change, you will get ¤14 less than you would have before the Brexit vote in June.

But there’s a silver lining for anyone putting money in the stock market.

When the pound is weak against other currencies, British companies that do a lot of business in foreign countries get a boost.

Multinational firms such as insurer RSA, mobile phone provider Vodafone and construction equipment rental company Ashtead have seen their share prices rise by as much as 27pc since the Brexit vote.

There is a simple reason for this. Take Ashtead. It rents out industrial diggers, drillers and other equipment to construction businesses in the UK — but £86 in every £100 it earns in revenue is in the U.S. and Canada.

That means it makes most of its money in dollars. When it converts its income from dollars back into pounds, it’s worth much more.

The day before the eU referendum vote, $1 could be turned into 68p. Today, each U.S. dollar is worth 75p — a rise of 10.3 pc.

So Ashtead’s profits look much higher than they did before the pound’s fall against the dollar.

As well as boosting the value of your pot, the amount of income you receive from your shares — known as a dividend — is linked to the company’s profits.

So if it makes more money, so should you.

Jason hollands, director at broker Bestinvest, says: ‘The sort of firms that will do well when the pound falls are UK-based, but international businesses that make lots of money overseas.’

Some experts believe the pound could fall as low as $1.10 over the next year if the UK’s Brexit trade negotiations go slowly.

That could provide a further boost to multinational firms. But currencies can be volatile, so the pound could also rise and eat away at any gains you’ve made.

however, if the UK secures some excellent trade deals, then big British firms might benefit from new opportunities abroad and see their profits and share prices rise anyway.

Russ Mould, investment director at stockbroker AJ Bell, says: ‘You need to invest in firms you think are fundamentally good in their own right and not just because of a currency falling.’

Generally, the companies doing best from the weak pound are the larger firms in the FTSe 100, which has risen from 5,982 in the immediate aftermath of the eU referendum to 6,868 — that’s an increase of 14.8 pc.

Fund managers who are making the most of the spectacular run include Nick Train, manager of the Lindsell Train UK equity fund, which has turned £10,000 into £21,000 in the past five years.

The fund, tipped by Jason hollands at Bestinvest, invests in British companies, such as the Guinness and Johnnie Walker whisky maker Diageo and software firm Sage, which makes accountancy and payroll software for businesses.

About a third of these firms’ business comes from the U.S. and Canada. Adrian Lowcock, director at investment company Architas, tips Threadneedle UK equity Income. It has turned £10,000 into £19,330 over the past five years and invests in giant UK firms such as Imperial Brands, makers of Lambert & Butler cigarettes. Imperial sells cigarettes and cigars all over europe and Asia. It’s also the third largest tobacco firm in the U.S., making 11.3 pc of its total revenue in the region. Laith Khalaf, of broker hargreaves Lansdown, picks Old Mutual UK Alpha, which has turned £10,000 into £14,810 in five years. The fund invests in pharmaceutical giant GlaxoSmithKline, which this month announced a new partnership with Alphabet, the parent company of Google, that will result in a £540 million investment in so-called bioelectronic medical research. This type of medicine uses electrical signals, rather than drugs, to treat ailments such as arthritis.

Ben Yearsley, of investment firm Wealth Club, tips the Artemis Income fund, which has turned £10,000 into £17,610 in the past five years.

It has money in phone and broadband provider BT, which operates in 180 countries.

BT recently began working with Nokia to research 5G technology, which will allow mobile users to surf the internet at much higher speeds.

Another way to invest is through a tracker fund. These are generally cheaper as you don’t have to pay a fund manager to look after your investment.

Look for a FTSe 100 tracker that replicates the growth of the 100 largest firms on the British stock market.

The L&G UK 100 Index Trust, for example, charges 0.06 pc a year through hargreaves and 0.1 pc through other brokers.

The BlackRock UK equity tracker costs 0.06 pc and is available through most of the big fund supermarkets.