Investing Goals: England

WORLD CUP INVESTMENT SERIES: In part seven of our eight-part series, we feature our Group G favourite - England

Emma Wall 22 June, 2018 | 2:58PM
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This article is part of our World Cup 2018 Investment Series, one top market pick from each of the eight Groups – but instead of comparing sporting prowess we outline the best investment prospect.

England 1966 World Cup football 2018 Russia tournament UK FTSE 100

It has been more than 50 years since England won the football World Cup at Wembley Stadium. 1966 is a year of legend, with the hosts beating West Germany 4-2. The closest England has come to lifting the trophy since is reaching fourth place in Italy in 1990.

But England’s 2018 World Cup campaign has got off to a good start, with a 1-2 win over Tunisia on Tuesday evening. Captain Harry Kane scored both goals, and leads a buoyant team to face Panama on Sunday. While England – ranked 10th in the world by FIFA – is expected to beat Panama – ranked 55th – pessimistic pundits have been quick to remind England fans that Belgium is the Group G favourite.

Not so when it comes to investment prospects however. The FTSE 100 is unloved by international investors, thanks to Brexit concerns and slowing economic growth, creating ample opportunity for clever stock pickers.

The FTSE 100 revenues are 70% sourced from outside of the UK, leveraging global growth, which remains strong. World-class companies; pharmaceuticals, banks, tobacco stocks, miners and telecoms giants, are listed in London and dividends paid in euros and US dollars have been boosted by a beaten-up pound.

Not to say domestically focused stocks should be ignored. David Madden, Market Analyst at CMC Markets notes: “Housebuilders like Berkeley Group and Bovis Homes have gone on to rack-up fresh all-time highs. Both stocks are well above the pre-referendum level, thanks to several factors: loose monetary policy, the fall in sterling, the government’s help-to-buy-scheme, and the willingness of banks to lend.”

How to Access the UK Market

Lindsell Train UK Equity Fund stands among Morningstar' research group’s highest-conviction pick within the active UK equity space. It is the only fund with both a Gold Morningstar Analyst Rating, and a five-star performance rating.

“The fund benefits from the stewardship of an experienced and talented UK equity manager in Nick Train. Train has run this fund since launch in 2006 but has a track record going back to 2000 on Finsbury Growth and Income Trust, a closed-end fund managed using the same mandate,” says Morningstar fund analyst Natalia Wolfstetter.

On the value side of the style spectrum, Wolfstetter highlights Silver-rated Man GLG Undervalued Assets. While the fund was only launched in November 2013, analysts’ conviction is boosted by a track record from a previous fund, which manager Henry Dixon ran from launch in 2008 until November 2014 using the same investment approach. The fund has a significant allocation to mid- and small-cap stocks.

“Another highly regarded fund is the JOHCM UK Dynamic Fund which was upgraded to Silver from Bronze in September 2017,” adds Wolfstetter. “Its manager, Alex Savvides, has continued to impress through the disciplined application of his strategy and the strength of the fundamental company analysis.”

If you prefer to add your UK exposure through passive funds, you are equally spoiled for choice. The SPDR FTSE All Share ETF (FTAL) earns a Bronze Analyst Rating, with Morningstar analyst Hortense Bioy saying “the comprehensive and well-diversified nature of SPDR FTSE All Share ETF relative to its UK large-blend Morningstar Category peers makes it a worthwhile investment proposition.”

The iShares UK Equity Index tracker fund earns a Silver Rating, as does the L&G UK Index tracker fund.

Bioy praises the iShares fund’s “rock bottom cost”, and said it has “the potential to deliver superior returns over a full market cycle”. Of the L&G tracker she warns: “Because of its large-cap bias relative to category peers, it is not reasonable to expect the fund to land at the top of the pack over short time horizons, particularly when the market environment is favourable to mid- and small caps.”

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
iShares UK Equity Index (UK) D Acc282.07 GBP0.60Rating
JOHCM UK Dynamic Y GBP Acc1.84 GBP-0.11Rating
L&G UK Index I Acc383.70 GBP-0.05Rating
LF Lindsell Train UK Equity Acc519.23 GBP-0.35Rating
Man GLG Undervalued Assets Profl Acc C202.00 GBP-0.20Rating
SPDR® FTSE UK All Share ETF Acc62.09 GBP-0.07Rating

About Author

Emma Wall  is former Senior International Editor for Morningstar

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