Brexit’s impact on UK equity funds

Morningstar has highlighted three UK equity funds that it says should weather the Brexit storm. Each fund invests significantly in international companies.

The FTSE 100, after opening more than 8% down on the day of the Brexit result, staged a recovery to finish around 3% down. Commentators noted that the mainly international companies in the index had benefited from the dramatic fall in sterling’s value because most of their income is from overseas.

The Old Mutual UK Alpha fund, managed by Richard Buxton, includes large companies such GlaxoSmithKliine and Royal Dutch Shell.

The Lindsell Train UK Equity fund looks to invest in high-quality franchises and includes international firms in its holdings such as Unilever and Diageo. The fund’s allocation to giant- and large-cap stocks stood at 75% as of May 31 2016.

Finally, Morningstar highlighted the Royal London Sustainable Leaders fund, which seeks to invest in companies that benefit society with their products and services. Again, the fund’s allocation to giant- and large-cap stocks is large – at 77% in May.

For more commentary on the state of UK equities following Brexit, read the July/August edition of Funds Europe out soon.

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