Why Brexit blues might mean UK investment trusts are a bargain

by Adrienne Lawler
January 6, 2019

Nobody every accused JP Morgan of being overly sentimental and right now, their shrewd assessment of the market is exactly what Investors need. Read this opinion piece from them then about the opportunities that Brexit is providing for potential profits in 2019.

Shares in several investment trusts focused on the United Kingdom which have a history of raising dividends and delivering capital growth, can now be bought for less than their net asset value (NAV). While share prices and NAV can fall without warning, widespread anxiety about Brexit might mean bargains for the brave.

Fears about Britain’s future outside the European Union have caused many fund managers to shun the United Kingdom. Independent statistician Morningstar reports that the average allocation to UK equities has halved during the past decade, from 20% of the typical investment trust in 2008 to less than 10% now. 1

Nor is it just institutional investors who are allocating assets overseas. Many individual investors are following the trend. Chris Cummings, Head of the Investment Association, a fund managers’ trade body, said: “The UK is firmly out of favour amid Brexit uncertainty, with outflows exceeding £3.5bn since the beginning of this year.2 “

But some shrewd asset allocators believe that there are reasons to be optimistic despite the pessimism of crowds. Callum Abbot, co-manager of the £440m JPMorgan Claverhouse Investment Trust plc, said: “The UK equity market is unloved and cheap. If Brexit proves more benign than widely expected, there is potential for reallocation to UK equities.”

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