The shares to buy in 2020 (chosen by the professionals)

Despite the ‘Boris bounce’, British firms remain cheap. Harry Brennan finds out where fund managers are investing

Investors are returning to the stock market after Boris Johnson’s 80-seat Conservative majority election victory marked the beginning of the end of more than three years of Brexit uncertainty. Professional investors piled £33bn into London-listed stocks on the day after the election. More than two billion shares changed hands, sparking a “relief rally” with some companies surging almost 20pc in value.

Now, private investors, who have pulled more than £13bn out of the market since the June 2016 Brexit vote, are hoping to get in on the action.

They are more confident about investing in the UK than they were a year ago, with 40pc saying they intend to invest more in 2020 and half saying they would maintain 2019 levels of investment, according to a survey. So, where are they putting their money, and should DIY investors follow suit?

Capital & Counties properties

London is one of the only places in the country where property prices are in reverse. With a more stable political scene, money should start flooding back in.

This is the thinking behind ES River and Mercantile Dynamic Equity fund manager Will Lough’s recent investment in this property development firm. In November it abandoned a £12bn residential development plan in Earls Court, after the site’s value fell by more than half.

The company is now focusing on a portfolio of shops and restaurants in Covent Garden.

DFS

The three-year Brexit deadlock stalled property transactions, but Simon Gergel of Merchant Trust has invested in this high-street brand with a simple strategy in mind – when people start buying houses again, they will need to furnish them, and sofa sales will rise.

Backers of the business say it can weather the decline of the high street, with sofas one of the things people remain uncomfortable buying online.

Masimo

Zehrid Osmani, manager of the Legg Mason IF MC European Unconstrained fund, has just bought shares in this medical technology business. It makes monitors for hospitals to measure patients’ vital functions, such as heartbeats. It is attempting to champion non-invasive ways of collecting this information, meaning tubes, injections or drips are not needed. This is especially useful when treating more sensitive patients such as babies, children and the elderly.

The manager said that with the new Government placing healthcare at the heart of its agenda and enshrining NHS funding commitments in law, the company is well placed to grow as lawmakers work out how to look after an ageing population and increasingly common diseases such as dementia, now affecting around 850,000 people in Britain alone.

Lancashire Group

Insurance premiums are expected to rise next year, after years of low rates.

Today’s savvier consumers have caught on to the fact that they have been subsidising new customers, paying higher rates despite years of loyalty.

But insurers can’t continue to offer cheap cover for all, and a combination of regulatory pressures and subsequent increases in insurance premium tax mean many are putting up prices. Simon Young, of the AXA Framlington UK Equity Income fund, bought stock in this insurance underwriter in November and is waiting for the profits to roll in.

enel

In 2019, teenage activist Greta Thunberg was named Time magazine’s person of the year, protest group Extinction Rebellion wreaked havoc in cities across the globe, and the term “climate emergency” entered common usage.

This energy firm plans to be at the core of the transition away from carbon and has pledged to scrap its own coal business altogether by 2030.

Firmino Morgado, manager of the Man GLG European Alpha Income fund, believes that, as one of the world’s largest renewables companies, its stock will perform well as we enter a new, greener decade.

Four in 10 say they want to invest more in British stocks in 2020