FTSE rising whilst prospect of FTA seems to be fading

MaxiRobriguez

I used 5% of my pension portfolio that was in cash to move into UK a recovery fund and a UK smaller co' fund last week in anticipation of a deal. 

That play is still available if anyone is still thinking about it, but should a deal not be found and we end up on WTO in January then those types of fund will be hit quite hard.

Place your bets...

Alexland

MPN said:

In the end I went with Murray Income. 

Good choice MUT and CTY were both performing as well, on an accumulation basis, as the FTSE World over the 20 years before the Brexit decision. CTY was lumbered with (what now seems) very high interest rate long term loans which have been rearranged at attractive rates so hopefully the leverage will start contributing to performance again especially if we see a rebound for UK stocks in the next few weeks and months. Although we don't need the income yet it's reassuring to know our mortgage repayments are mostly covered by smoothed S&S ISA dividends.

Sailtheworld

If sterling increases the £ value of the asset may fall but those £ are worth more. If sterling falls the £ value of the asset may rise but those £ are worth less. Can't see the bet to be honest.

If someone wants to bet on currency they may as well do it directly

MaxiRobriguez

Sailtheworld said:

If sterling increases the £ value of the asset may fall but those £ are worth more. If sterling falls the £ value of the asset may rise but those £ are worth less. Can't see the bet to be honest.

If someone wants to bet on currency they may as well do it directly

Brexit deal will improve currency and UK equity sentiment. Double boon, the the rise in stocks should outperform currency changes. Even if it they don't, I'd rather own UK stocks and get dividends.

Sally57

Alexland said:

MPN said:

In the end I went with Murray Income. 

Good choice MUT and CTY were both performing as well, on an accumulation basis, as the FTSE World over the 20 years before the Brexit decision. CTY was lumbered with (what now seems) very high interest rate long term loans which have been rearranged at attractive rates so hopefully the leverage will start contributing to performance again especially if we see a rebound for UK stocks in the next few weeks and months. Although we don't need the income yet it's reassuring to know our mortgage repayments are mostly covered by smoothed S&S ISA dividends.

I considered both these IT’s but decided I wanted a UK OEIC so invested in Royal London Sustainable Leaders Trust C Acc. This fund holds a number of companies that are also held by MUT and CTY.

MonroeM

MaxiRobriguez said:

Sailtheworld said:

If sterling increases the £ value of the asset may fall but those £ are worth more. If sterling falls the £ value of the asset may rise but those £ are worth less. Can't see the bet to be honest.

If someone wants to bet on currency they may as well do it directly

Brexit deal will improve currency and UK equity sentiment. Double boon, the the rise in stocks should outperform currency changes. Even if it they don't, I'd rather own UK stocks and get dividends.

So will FTSE 100 companies that  trade on a global basis (in many currencies) such as pharmaceuticals like AstraZeneca and GSK benefit from a trade deal?

Another_Saver

MonroeM said:

MaxiRobriguez said:

Sailtheworld said:

If sterling increases the £ value of the asset may fall but those £ are worth more. If sterling falls the £ value of the asset may rise but those £ are worth less. Can't see the bet to be honest.

If someone wants to bet on currency they may as well do it directly

Brexit deal will improve currency and UK equity sentiment. Double boon, the the rise in stocks should outperform currency changes. Even if it they don't, I'd rather own UK stocks and get dividends.

So will FTSE 100 companies that  trade on a global basis (in many currencies) such as pharmaceuticals like AstraZeneca and GSK benefit from a trade deal?

It seems reasonable to expect the certainty of  a major global trade deal to be good news for anything listed in the UK and anything that trades globally.

MaxiRobriguez

MonroeM said:

MaxiRobriguez said:

Sailtheworld said:

If sterling increases the £ value of the asset may fall but those £ are worth more. If sterling falls the £ value of the asset may rise but those £ are worth less. Can't see the bet to be honest.

If someone wants to bet on currency they may as well do it directly

Brexit deal will improve currency and UK equity sentiment. Double boon, the the rise in stocks should outperform currency changes. Even if it they don't, I'd rather own UK stocks and get dividends.

So will FTSE 100 companies that  trade on a global basis (in many currencies) such as pharmaceuticals like AstraZeneca and GSK benefit from a trade deal?

In my view, yes. A trade deal which allows some sense of normality to continue between UK and EU will mean a rush of global investors picking up UK index funds due to increase confidence and to do so before GBP appreciates further, which will outweigh the negative impact of currency fluctuations on UK stocks that earn most of their revenue abroad.

I would anticipate if the deal is done then FTSE100 and 250 both go up, but 250 more so.

MaxiRobriguez

MaxiRobriguez said:

MonroeM said:

MaxiRobriguez said:

Sailtheworld said:

If sterling increases the £ value of the asset may fall but those £ are worth more. If sterling falls the £ value of the asset may rise but those £ are worth less. Can't see the bet to be honest.

If someone wants to bet on currency they may as well do it directly

Brexit deal will improve currency and UK equity sentiment. Double boon, the the rise in stocks should outperform currency changes. Even if it they don't, I'd rather own UK stocks and get dividends.

So will FTSE 100 companies that  trade on a global basis (in many currencies) such as pharmaceuticals like AstraZeneca and GSK benefit from a trade deal?

In my view, yes. A trade deal which allows some sense of normality to continue between UK and EU will mean a rush of global investors picking up UK index funds due to increase confidence and to do so before GBP appreciates further, which will outweigh the negative impact of currency fluctuations on UK stocks that earn most of their revenue abroad.

I would anticipate if the deal is done then FTSE100 and 250 both go up, but 250 more so.

To add some weight to this, over the last few days with GBP appreciating and markets seemingly continuing to price in a deal, my UK based equity portfolio has gone from 5% gain for trailing 12 months to 8% now. The portfolio is broadly split 60/40 between bigger global (f.e Unilever, GSK) and smaller UK based (f.e Boohoo, MnG), with the bigger co's rising 1-2% and the smaller co's rising 4-6%.

Quite happy with my positioning now. Across all portfolios I'm still slanted far more towards global equities so a Brexit trade deal is on paper going to reduce total value, but on the flip side I'm still in accumulation stage as a relative youngster here, so any rapid improvement in GBP will just mean I start buying more global equities again.

Alexland

MaxiRobriguez said:

Quite happy with my positioning now. Across all portfolios I'm still slanted far more towards global equities so a Brexit trade deal is on paper going to reduce total value, but on the flip side I'm still in accumulation stage as a relative youngster here, so any rapid improvement in GBP will just mean I start buying more global equities again.

I doubt the currency movements on a deal will be enough to materially damage our global equities (maybe a small setback) but the idea of building an old fashioned UK income trust portfolio in our S&S ISAs is very tempting. It's just so unbearably long until we can get access to our pre-funded pensions we might end up saving for retirement twice so we have enough income to cover our 50s. If doing this it would be better that UK markets doesn't recover too well after a deal announcement as it would be a shame if the dividend reinvestment was buying in at higher prices in future. So if it recovers too well then the opportunity is gone and probably back to global equities again but I wonder if there is too much price risk building up in a few of the big US growth stocks.