Lloyds Bank is yielding 6 per cent27 Oct 2018 10:59
Safe haven shares and funds for nervy times
October has hardly been a month for investors to celebrate, but there is good news if you look for it. Defensive stocks, notably utilities and consumer goods, have avoided the worst of recent falls, with the sectors returning 5 per cent and 3.6 per cent respectively on the S&P 500, and 3.7 per cent and minus 1.3 per cent on the FTSE All-Share. Laith Khalaf, a senior analyst at Hargreaves Lansdown, an investment platform, recommends the defensive Newton Real Return and Pyrford Global Total Return, multiasset funds that give their managers free reign to search for opportunities.
For Jason Hollands, a managing director at Bestinvest, the latest falls in America are a signal that the earnings cycle has peaked and that stocks will soon succumb to the strong dollar and the US-China trade war. “We have been trimming US exposure and allocating more into UK and emerging markets, both of which are cheap,” he says. He tips value-focused funds searching out companies with strong cashflows, including Jupiter UK Special Situations and Threadneedle UK Equity Income.
Picking cheap stocks in a declining market, which managers liken to catching a falling knife, requires careful research, however. Many are cheap for a reason, says Rob Burgeman, an investment director at Brewin Dolphin. He suggests sticking to “quality stocks with decent medium-term prospects that have seen some profit taking,” recommending Nike (down 12.7 per cent in the past month) in the US, and Ashtead Group (down 24 per cent) in the UK.
As talk of a no-deal Brexit increases, banks are taking a kicking, and may provide value. Lloyds Bank is yielding 6 per cent, with a share price lower than when António Horta Osório took over in 2011, despite the bank going from a loss that year to a near-£5 billion profit in the year to September. “This is about sentiment,” Khalaf says.
If you’re anxious about investing while prices are dropping, drip-feeding your money may help to allay your fears. You’ll end up with more of whatever it is you’re buying when prices fall.
https://www.thetimes.co.uk/article/safe-haven-shares-and-funds-for-nervy-times-w3n8hfc7n
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