5th December 2013
Hargreaves Lansdown has split the budget into five themes and suggested a fund to play each one. These are:
UK Growth – After years of sluggish recovery the UK economy is growing again. The Office for Budget Responsibility more than doubled its growth prediction to 1.4% for 2013 and expects it to rise to 2.4% in 2014. Investors can access this theme through the Jupiter UK growth fund managed by the experienced Ian Mcveigh.
UK Exporters – The government will double the UK Enterprise Fund commitment limit to £50bn, helping British exporters take advantage of opportunities in new and emerging markets. The government hopes to double exports by 2020. Lindsell Train UK Growth invests in strong global leaders such as Diageo and Unilever.
House Builders – The Government will issue £1 billion in loans to unblock large housing developments and give local authorities additional flexibility to increase housing supply and support new affordable housing. The Old Mutual UK Mid Cap fund, managed by Richard Watts, is overweight to house builders and has 10.2% exposure to the household goods and home construction sector.
Retailers – The retail sector, particularly smaller companies, will benefit from a discount in business rates of up to £1,000 in 2014-15 and 2015-16 for retail properties (including pubs, cafes, restaurants and charity shops) with a rateable value of up to £50,000, and a 50% discount from business rates for new occupants of previously empty retail premises for 18 months. Richard Buxton, manager of the Old Mutual UK Alpha fund, has been successfully playing the UK recovery theme. With 7.6% in retailers this fund should benefit from any resurgence in the retail sector.
Infrastructure – The Chancellor announced a new tax relief for shale gas production, and further reforms to make the most of the UK’s science base, including a new network of Quantum Technology Centres. Yesterday the Government announced £375 billion of infrastructure spending over the next 20 years. Investors could get exposure to this area through a globally diversified fund such as First State Global Listed Infrastructure.
Adrian Lowcock, senior investment Manager at Hargreaves Lansdown says: “The outlook for the UK economy has improved significantly in 2013, and increased confidence has trickled down to the stock market with the FTSE All Share rising by 16.2% this year. The government’s focus on reducing the costs of doing business in the UK should be good news for investors in the long run.”