Making money: what the experts think
Tiggerish times?
Whether or not you’re as “Tiggerish” about the economy as Chancellor Philip Hammond, this week’s improved growth figures offer investors a pep of sorts. As economist Ian Stewart of Deloitte pointed out: the new forecasts “put the UK in a better position to face the moment of truth on Brexit”. For now, UK equities are currently “the least popular in the world”, according to fund manager investment surveys, said FT. And the largest institutional investors “show little sign of being lured back in by the promise of bargains”.
Bottom-fishers
Yet that kind of negative sentiment is manna to a growing number of contrarian investors currently “scouring the London stock market for bargains”. They include Oldfield Partners, which is renowned for going after assets “that others hate”, and is usually to be found investing in “far-flung assets such as Russian oil companies and Japanese banks”. Currently, about a quarter of its funds are invested in UK companies, including BT and Lloyds, because “the lack of clarity over the path Brexit takes” is now more than discounted in valuations. Another “cult value investor” with an eye on Britain is Baupost, the Boston hedge fund run by Seth Klarman, which took up a position last year in the bombedout shares of Dixons Carphone. The $140bn Chicagobased value fund manager Harris Associates is also sniffing around arguing that “traumatic events” like Brexit offer “opportunities” for patient bottom-fishers.
Take AIM
Another reason to buy British is tax planning, says Ian Cowie in The Sunday Times. Because of “a quirk” in the way some shares listed on London’s junior AIM index are treated by HMRC, they’re a useful way for estates exceeding the £325,000 inheritance threshold to sidestep a 40% tax bill. AIM companies not involved in agriculture, financial services or property can be exempt from IHT after you’ve owned them for two years (instead of the usual seven-year rule for tax-free gifts). And not all are as risky as the index’s racy reputation implies. “Serious businesses”, including fashion firm Asos, tonic-maker Fever-tree and the brewer Young & Co.’s, are all worth a look.