Trustnet Magazine Issue 24 December 2016 | Page 24

IN FOCUS / SECTOR PROFILE / THE UK FOR WHAT IT’S WORTH… THE BURNING ISSUE WHEN IT COMES TO THE PROSPECTS FOR THE UK next year is the one hanging over from 2016, namely Brexit. While the government is expected to trigger Article 50 as early as spring, Alex Crooke, manager of the Bankers Investment Trust, says this will only be the start of the discussions. “In the absence of being sure we will get any Brexit resolution, the uncertainty it has created is likely to persist,” he said. “However, this has not stopped corporates putting money on the ground, so it looks like they are unperturbed by it and the hope is this carries on.” Another potential headwind is inflation, which could reach as high as 4.5 per cent. Crooke says this is likely to act as a headwind for consumer spending which makes him cautious on UK domestic stocks. As a result, he has taken the UK weighting of the globalmandated Bankers trust down from 40 per cent to 27 per cent over the past year and says this could drop even lower. His favoured sectors include life insurance and financials, while he also says housebuilders represent good value given their high dividend yields. “We think the Office for Budget Responsibility’s recent 1.7 per cent GDP forecast for 2017 is optimistic,” he said. “Instead, 1 per cent would be a good outcome and while we don’t think there will be a recession, we do think tough times are ahead.” The Winterflood view: Kieran Drake, a research analyst at Winterflood Investment Trusts, says: “Given the movements in markets we have seen since Trump’s election, rising bond yields and a recent sell-off in bond proxies, a trust that adopts a contrarian bias could benefit. As such, within the UK, a trust we would highlight at present is Alastair Mundy’s Temple Bar Investment Trust.” Few analysts got all the big calls right this year, but Brexit and Donald Trump will give them some major clues to how 2017 pans out, writes Adam Lewis F OR ALL THAT THE EVENTS OF 2016 TOOK EVERYONE BY SURPRISE, Trustnet Magazine’s 12-month outlook published this time last year wasn’t too wide of the mark. While no one made a call on Donald Trump or Brexit, Rathbones’ David Coombs predicted a “difficult and volatile year” but backed the US to outperform, Henderson’s James de Bunsen named emerging markets as a sector that 22 presented some interesting opportunities and Chelsea Financial Services’ Darius McDermott highlighted oil and commodity stocks as potential value plays. They didn’t get everything right, of course – you can see what they had to say here. Looking ahead, 2017 looks set to carry on providing surprises. With this in mind, we gaze into the proverbial crystal ball to see what the experts think will happen next year and how this will affect their investment decisions. trustnetdirect.com trustnetdirect.com 23