Block out the Brexit noise and think long term

AS WE approach the October 31 Brexit deadline, volatility in the UK stock markets shows no sign of abating.

With less than two months to go, we still don’t know on what terms the UK will leave the EU — or if it will even leave at all.

And while Brexit concerns are weighing heavily on UK stock markets, there are many other factors impacting markets including a possible UK or U.S. recession, political tensions in the Middle East and the escalation of the trade war between the U.S. and China.

One thing is certain. Investors can do nothing to affect these outcomes. Instead, experts say savers should look beyond Brexit, and make longterm investment decisions to achieve stable returns.

Patrick Connolly, financial planner at independent advice firm Chase de Vere, says: ‘Too many people make investment decisions based on short-term performance or opinions causing them to buy when share prices are high and sell when they are low.

‘Investors will achieve long-term returns and ride through difficult times by adopting a long-term plan and blocking out the shortterm noise.’

For savers looking to invest for ten years, Mr Connolly recommends Fidelity Global Dividend. This fund is run by Daniel Roberts, an experienced manager, who is supported by a strong investment team.

The fund invests in large, goodquality companies, such as Unilever and Procter & Gamble, in order to achieve a sustainable level of income, currently 2.7 pc.

The fund, which charges 0.92 pc, has a consistent track record and stands up particularly well in volatile markets. If you’d invested £10,000 in 2014, your investment would now be worth £18,700.

For savers who want to invest mostly in the U.S. and Europe, Mr Connolly recommends Rathbone Global Opportunities. This fund has been managed by James Thomson since 2003 and has established a strong track record. The manager adopts a flexible approach as he searches for under-the-radar and outof-fashion companies which are growing.

The fund has an excellent longterm record. If you had invested £10,000 five years ago, your investment would be worth £22,240 today. The fund charge is 0.78 pc.

Ben Yearsley, director at Shore Financial Planning, recommends the First State Global Listed Infrastructure fund.

Only 5pc of the fund is invested in the UK. It plumps for utilities such as water and electricity, highways and airports. Much of the income generated by infrastructure projects is inflation-linked.

The fund is managed by Peter Meany and charges 0.78 pc. If you had invested £10,000 in 2014, your investment would now be worth £19,424.

For savers who prefer funds that track the performance of an index rather than be steered by a fund manager, Mr Connolly recommends L&G International Index.

This tracks the performance of the FTSE World (excluding the UK) Index. As it invests more in the largest companies in the world, its biggest weighting is in the U.S. and its largest holdings are in companies such as Microsoft, Apple and Amazon.

If you had invested £10,000 five years ago, your investment would now be worth £18,540. The fund has a charge of 0.13 pc.

UK companies are thought to be undervalued at the moment. Many firms continue to make consistent profits despite the political and economic uncertainty, but their share price has fallen because overseas investors are giving the UK a wide berth. In the FTSE 100, the combined value of the 50 companies most exposed to the economy and Brexit, such as those in the retail sector like M&S and JD Sports, supermarkets such as Tesco and Morrisons, and banks have fallen by 18 pc. Meanwhile, the remaining 50 internationally focused firms such as Erra, Glencore and Rio Tinto in the mining sector, and oil giants such as BP and Shell have risen in total by 33 pc in value, according to analysis by broker A.J. Bell. Mr Yearsley says: ‘Aviva, Legal & General and the banks’ share prices are ridiculously low. ‘If you buy now, there is a risk they could get even cheaper. But if you plan to invest for three to five years, their share prices will likely recover, and in the meantime you will be receiving a healthy dividend.’

He cautions against buying cheap shares to ‘make a shortterm buck’ because stock prices may fall further yet.

Mr Yearsley recommends the Franklin UK Equity Income fund. The fund, which charges 0.52 pc, is managed by Colin Morton who likes to hold companies in the fund for the long-term, rather than chop and change holdings.

At least 70 pc of the fund is invested in large companies such as BP, Shell and GlaxoSmithKline. If you had invested £10,000 five years ago, your investment would now be worth £14,088.

Mr Connolly recommends the JOHCM UK Dynamic fund. Fund manager Alex Savvides looks for UK opportunities that are out of fashion or being ignored by the broader market. If you had invested £10,000 five years ago, your investment would now be worth £13,660.