HL SELECT UK GROWTH SHARES
HL SELECT UK INCOME SHARES
What does the UK election result mean for the HL Select Funds?
Managers' thoughts
HL SELECT UK GROWTH SHARES
HL SELECT UK INCOME SHARES
Managers' thoughts
Steve Clayton - Fund Manager
9 June 2017
Politics is good news for newspaper owners these days, and with the political fault lines left clearly exposed after this election result, this is unlikely to change any time soon.
Theresa May gambled on being returned to Number 10 with a stronger mandate to steer the country through Brexit. She lost the bet. Who will go into a coalition with her after seeing what befell the Liberal Democrats in 2010?
The only certainty about coalitions, is that the minor parties rarely enter them without getting a payback. So the process of coalition formation could be fractious and drawn out.
Uncertainties abound still, but what seems most likely is that there will be no dramatic changes that affect the portfolios’ share holdings. Sterling and bond yields are little changed, and equity markets appear unrattled.
Questions will linger about which Conservative will be leading the party in a years’ time, but the party itself remains in power. Tax rates have not moved one iota, nor has Brexit been taken off the agenda. Despite all of the noise and the fury, very, very little that actually matters has changed.
So right now, Charlie and I see little reason to change the portfolios’ holdings. The market is likely to welcome the continued sterling weakness following last year's referendum and the boost that gives to overseas profits. It may be relieved that the sharp increase in the minimum wage, promised by Labour will now not happen, so retailers and leisure companies might see some upside. Utility shares and transport operators could also benefit from the threat of nationalisation being lifted. But this is all very much at the margin.
Our strategy has always been to focus on companies that are in charge of their own destiny and events like this reinforce our stance. Holdings like Unilever, Diageo and Reckitt Benckiser earn the vast majority of their income abroad. Technology shifts are what drive the growth of many of our stocks, and the colour of the government matters little here.
Lively’ trading is likely in the near term. But during these times, investors need to be responsive and flexible, keeping their eyes on the prize, mindful that in the long run, only those in the market can benefit from its remarkable ability to create wealth. So we’re viewing the days ahead as an opportunity to go searching for bargains, although volatility is likely to persist.
Find out which companies fit our approach for HL Select UK Shares
Find out which companies fit our approach for HL Select UK Income Shares
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