Brexit Survival Kit: Investing whether it's Deal or No Deal

An updated look at investment ideas that should help to steer you through each possible Brexit scenario.

Article updated: 18 October 2019 11:00am Author: Ian Forrest

investing after brexit

The deadline for the UK leaving the EU fast approaching and while a deal has finally been agreed with the EU, without support of the DUP it looks unlikely to get through Parliament at the weekend.

Adding to the sense of uncertainty are rumours that many MPs are still pushing for a second referendum and many commentators believe a General Election is almost certain in the coming months. Given all that it isn’t surprising Sterling and the equity markets have been increasingly volatile with big swings in share prices as rumours swirl around the progress of the negotiations.

Any attempt to make firm predictions is rather futile but Ian Forrest, Investment Guidance Analyst at The Share Centre can offer some investment ideas that should help investors steer through the most likely scenarios. Investors from different age groups often have very different priorities and approach risk in a different way for understandable reasons so below we consider what investments might be suitable for these groups.

Soft Brexit

Should the deal get through Parliament we would expect to see a rebound in investment spending and consumer confidence, which would result in Gross Domestic Product (GDP) growth. The Bank of England (BoE) will likely raise rates; Gilt yields will climb and Sterling will strengthen. The FTSE 100, however, probably won’t be able to shake off the drag from the global growth slow down and trade tensions, making returns more challenging this year.

For investors in their 20s-40s who are looking mainly for growth and willing to take a medium to higher level of risk we like:

LF Miton UK Smaller Companies aims to achieve long-term total returns by investing primarily in UK quoted smaller companies. This fund will be more aligned with the growth prospects of the UK domestic economy and may provide a buffer against a volatile global economy, should soft Brexit or no Brexit prevail.

Boohoo is an AIM-listed online fashion retailing business. Consumer confidence should pick up once the cloud of uncertainty fades away.

For those investors between 40 and 60 years old and who are looking for a mixture of income and growth as they approach and enter retirement:

TR Property Investment Trust focuses on acquiring assets with future growth and capital appreciation potential rather than immediate initial yield or discount to asset value. Should a deal be passed by parliament, the uncertainty and volatility imposed on the property trust would be eased.

DB X-Trackers FTSE 250 ETF gives full replication to the index of 250 constituents. We should see a rebound in investment spending in the UK and general activity levels picking up for more UK focussed companies.

Finally, for investors who are retired and looking mainly for lower risk income ideas:

Rathbone Ethical Bond fund provides a regular, above-average income through investing in a range of bonds and bond market instruments that meet strict criteria ethically and financially. The managers combine economic analysis and specific company credit selection generating individual ideas. With quarterly distribution, it is suitable for those investors with a risk appetite above cash and who are predominantly seeking income.

Hard Brexit

If the deal does not get passed and the UK crashes out of the EU without a deal, the damage could be substantial. We could see the pound fall sharply, consumer confidence dampen even more and growth slip further. With inflation fairly well behaved currently, the BoE will have the ability to support the economy by cutting interest rates. Supported by a lower pound, the FTSE 100 would probably outperform smaller companies as its income is largely generated from overseas operations. Hard Brexit could be a one-off shock and growth could then get back on track – although how quickly the economy could rebound would heavily depend on how policymakers responded.

For investors in their 20s-40s who are looking mainly for growth and willing to take a medium to higher level of risk we like:

Brexit will not stop the march of technology globally. GO UCITS Solutions Robo Global Robotics & Auto tracks the ROBO Global Robotics and Automation UCITS Index using a full replication methodology. The largest country weightings are towards the US and Japan and there is relatively little exposure to the UK.

For those investors between 40 and 60 years old and who are looking for a mixture of income and growth as they approach and enter retirement:

Artemis Income aims to produce a rising income with capital growth by taking advantage of valuation across market capitalisation with a bias for large cap value investments.

Schroder Income benefits from holding a number of large-cap UK firms with global operations that generate income worldwide and will benefit if sterling weakens.

Diageo, a beverage company seated in FTSE100, should benefit from the falling sterling as it derives most of its sales overseas and the US is its biggest market.

AstraZeneca researches, manufactures and sells pharmaceutical and medical products. It has made extensive preparations for Brexit and its global nature makes the company relatively immune from the uncertainty as well.

Finally, for investors who are retired and looking mainly for lower risk income ideas:

Legg Mason IF RARE Global Infrastructure Income seeks to generate a high, sustainable yield from an asset class with secular growth and manages changes in sentiment by rotating between regions and sectors. Currently about 15% of the portfolio is invested in Emerging Markets with an option to invest up to 20%.

First State Global Listed Infrastructure focuses on companies that can self-fund the expansion of their asset base, generate stable revenues and grow dividends. The portfolio mixes its defensive and growth holdings according to the economic or business cycle and is mainly invested in developed markets, especially North America.

No Brexit

If the UK government decides to revoke Article 50 and halt the Brexit process we could expect a heavy inflow of investment capital back to the UK. GDP would likely pickup faster than expected, as would Sterling. Inflation pickup would likely trigger the BoE to raise rates sooner; therefore inflation linked investments could be added into ones’ portfolio.

For investors in their 20s-40s who are looking mainly for growth and willing to take a medium to higher level of risk we like:

Stewart Investors Indian Subcontinent Sustainability fund is set up to grow by investing in companies based, or having significant operations, in India, Pakistan, Sri Lanka or Bangladesh. Consideration is given to investment in companies that are positioned to benefit from, and contribute to, the sustainable development of the countries in which they operate.

For those investors between 40 and 60 years old and who are looking for a mixture of income and growth as they approach and enter retirement:

LF Miton UK Multi Cap Income was set up in anticipation that small/micro-cap stocks would outperform the mainstream indices, especially overlooked small/micro caps, because they have a history of performing better than similarly sized growth stocks longer term. The fund would act as a good hedge against inflation.

Janus Henderson Index-Linked Bond aims to provide a return by investing primarily in UK Government issued index linked securities, providing protection against inflation.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Ian Forrest portrait photo
Ian Forrest

Investment Research Analyst

Ian’s background in investments, financial journalism and research has seen him advising private investors on equities and helping to manage portfolios. His qualifications include the Certificate in Financial Planning and the Chartered Institute for Securities & Investment’s Investment Advice Diploma.