Chance to profit begins at home

PATRICK CONNOLLY CHARTERED FINANCIAL PLANNER, CHASE DE VERE

THE Conservative Government’s 80-seat majority in the House of Commons will be a positive for both the UK stock market and the economy, according to financial advice firm Chase de Vere’s Patrick Connolly.

He says it gives the UK ‘decisive political leadership’, allowing the British economy to get back on track and a chance for UK businesses to ‘start spending and implementing business plans’.

The biggest beneficiaries from a stock market point of view will be domestically orientated stocks. Investment funds that he feels could do well as a result include Man GLG Undervalued Assets, JO Hambro UK Dynamic and Liontrust UK Smaller Companies.

For income investors, the JO Hambro fund pays an attractive annual dividend of 3.9 per cent, with the manager only investing in stocks that pay a dividend.

Connolly says: ‘The fund has a strong track record, looking for companies that are out of favour and where there is a catalyst for potential positive change – for example a new management team going in to revive a company’s fortunes.’

Over the past five years, the fund has outperformed the FTSE All-Share Index.

One final suggestion is the HSBC FTSE250 Index, a fund that tracks the performance of the biggest 250 listed companies outside the top hundred.

It is this index that experts believe will rise highest if there is a sustained rally in domestic-facing firms. Connolly says: ‘It includes familiar brands such as Just Eat, insurer Direct Line and builder Travis Perkins. It even includes F&C Investment Trust.’ The total charge on the fund is a competitive 0.18 per cent a year.

Connolly is keen to stress that the best approach for investors is to hold a balanced and well diversified investment portfolio. He says: ‘Nobody knows what will happen next in the UK or overseas that could drive markets up or down.’