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Election 2017: sterling weakness points to global trusts

Election 2017: sterling weakness points to global trusts

The pound is widely viewed as vulnerable following the inconclusive general election result. This could see sterling lose the gains it made after Theresa May called the snap poll in April.

With that in mind Iain Scouller of Stifel Securities has updated his list of global investment trusts with low UK exposure. He points out their overseas earnings and the value of their non-UK holdings could benefit if the pound falls again. Their diversified, international portfolios can make them good bolt hole if markets are volatile.

‘Following the shock result of a hung Parliament, we expect sterling to continue to be weak in the immediate period. Volatility is also expected in the weeks ahead with political instability likely. It is possible that another election is not too far away – possibly as early as October or next spring. Whether that would actually produce a clear outcome is questionable at this stage,’ he said.

Sculler says the UK weighting of the following trusts gives a good indication of their sterling exposure.

12 global trusts with low UK weighting: UK exposure (%) 
British Empire (BTEM)  27.6% (sterling 4%)
Bankers (BNKR)  26.80%
F&C Global Smaller Companies 25.80%
Edinburgh Worldwide (EWI)  23%
Alliance Trust (ATST)  17.20%
Securities Trust of Scotland (STS)  15.90%
JPMorgan Global Growth & Income (JPGI)  13.60%
Murray International (MYI)  12.20%
Foreign & Colonial (FRCL)  12.10%
Martin Currie Global Portfolio (MNP)  11.40%
Monks (MNKS)  6%
Scottish Mortgage (SMT)  4%

Source: Stifel Securities, Association of Investment Companies 31/3/17

Click on the factsheet links in the table for more information about the investment trusts.

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