Brexit talks in November pushing investors overseas

Sheridan Admans, Investment Manager at The Share Centre, examines The Share Centre’s ten top traded funds in November 2017:

Top traded funds in November 2017 from The Share Centre:

  1. CF Woodford Equity Income
  2. Fundsmith Equity
  3. AXA Framlington Global Technology
  4. Legg Mason Japan
  5. Henderson Global Technology
  6. Jupiter India
  7. Baillie G Greater China
  8. Marlborough UK Micro-Cap
  9. Lindsell Train Global Equity
  10. Artemis Global

“As well as the Chancellor’s autumn budget, the theme for November was very much the difficult ongoing Brexit negotiations. During the month, Ireland issued a stark warning that it will block progress of the talks unless a formal written guarantee that there will be no hard border with Northern Ireland materialises. Moreover, news broke that the UK could end up paying up to £50bn in the divorce bill due to existing financial commitments having to be settled as part of the overall withdrawal agreement.

“All of this has clearly had an impact on investors, demonstrated by the fact that 80% of the top traded funds list in November is made up of funds offering global diversification. This includes the entrants of two new funds the Baillie G Greater China and Artemis Global. Investors have long favoured Japan and India as their preferred regions so far this year, likely as a result of the ongoing positive economic reforms. The presence of a China focussed fund is probably because of the coverage surrounding the outcome from the National Congress of the Communist Party of China conference.

“Interest in the technology sector has continued from October in to November with two tech focussed funds in the top five. Disruptive factors and new innovations continue to spur significant changes in the life of individuals and business. Indeed, investor appetite in general seems to be up with the number of trades made in funds up 15% compared to the previous month.

“Those investors putting their faith in the UK are doing so in one of two ways. Either opting for a tried and tested manager with good reputation, Neil Woodford or taking a punt in a fund that offers exposure to smaller companies – the Marlborough UK Micro-Cap. Small companies have a great ability to grow their revenues over large caps, they tend to operate in less efficient markets where active management can really add value, there is a greater chance they will be acquired, they tend to have less leverage and finally they tend to trade at a discount to their intrinsic value. Woodford also has over 30% of his fund invested in smaller and unquoted companies. Indeed, they appear to have suffered to a much lesser extent than their larger cap peers.”