The Netherlands and Belgium have always been the ‘forward defence line’ of England, which is why the Tudors opposed Spain, William of Orange and the Georges feared France, and a pacifist Liberal cabinet declared war in 1914. In addition, Europe and the Low Countries for centuries helped form the basis of English prosperity, and still remain so.
The impact
Although there are doubts over whether the US economy can continue to expand, the eurozone is definitely slowing, and a bungled Brexit might hasten this as well as possibly causing some inflationary pressures – so far happily absent from this economic cycle.
More to the point, 2018 showed that traditional investment techniques failed: neither value, nor momentum, nor small cap produced the returns expected. Also, minute examination of the past failed to anticipate the future of an increasingly digital world, where increasingly disruptive business techniques require less and less capital to finance.
So perhaps UK investors should forget the FTSE and classic thinking, and concentrate on equity income generation instead. Ignore the hard-earned lessons of the past, and embrace the digital future. Reversion to the mean may never happen again to markets as a whole, any more than British high streets will revert to their former glory and prosperity.
Thus my anti-Brexit portfolio, shown in Table 1, will closely monitor the events of 2019 over the coming months, as political events unfold for good or ill, and not entirely without some caution. Half of the investment companies chosen are low risk, globally diversified and known for their prudence.
Table 1: An anti-Brexit portfolio for 2019
Investment company | Initial investment at December 31 2018 (£) | Share price at December 31 2018 (£) | UK exposure (%) |
Witan | 25,000 | 9.71 | 35 |
Alliance Trust | 25,000 | 6.88 | 12.3 |
Personal Assets | 15,000 | 391.50 | 10.5 |
Scottish Mortgage | 15,000 | 4.67 | 3 |
Worldwide Healthcare | 10,000 | 23.90 | 0.3 |
Polar Capital Technology | 10,000 | 11.04 | 1.4 |
Source: AIC/Morningstar. Copyright: Money Management
No more needs to be said about Personal Assets, since it has long been a favourite. Witan and Alliance Investment trusts are both now ‘dividend heroes’, as judged by the Association of Investment Companies, having increased their payouts every year over several decades.
Selection strategies
Both offerings use Willis Towers Watson to select their fund managers, but in very different ways. Witan has a strong investment management team and asset selection policy, subservient to the board, but uses specialist fund managers to cover investment gaps that it identifies as necessary to its tactical needs. Not surprisingly, it has a considerable weighting of UK stocks, but its use of WTW enables it to cover specialist markets when it sees opportunities outside its own expertise.
Witan investors therefore can use the company alone to cover their equity investment needs, whether emerging, technology, medical or whatever seems to be the most profitable and exciting.
