Planning beyond Brexit has become increasingly difficult for domestic fund managers as there remains little consensus about the kind of agreement on which the UK will leave the EU. 
Franklin Templeton Investments’ Colin Morton (pictured) has previously highlighted that there are three potential scenarios that investors need to be aware of.
As such, Morton has made few changes to his portfolio despite the appeal of valuations in the UK equity market.
However, he has added two new names to the portfolio since the start of the year.
The first name is Brewin Dolphin, the investment firm and wealth manager.
Morton said not only was the firm hit by the fourth quarter sell-off, it also suffered from its exposure to falling markets.
Price return of stock over 1yr
Source: FE Analytics
“It got impacted so much last year, obviously it was a tough year for markets,” he said.
“Obviously the guy on the street who’s potentially invested with the likes of Brewin, he would probably be put off doing very much because he felt pretty nervous about life.
“So the share price of Brewin Dolphin, which was ranked about £4 last summer, we were buying it early this year at just around about the £3 level; the share price had fallen around about 25 per cent from where it had been trading and it was yielding nearly 6 per cent.”
In addition to an attractive yield and valuation, the firm had very little debt on the balance sheet: another bonus for Morton.
Not only was the company priced attractively, however, it also plays into a long-term strategic growth story.
Morton said: “What we like about these investment management businesses in the long term is the fact that you have ageing populations across the west, and you see it in the UK.
“We all acknowledge the fact that people are going to have to save more money in order to provide for their own healthcare on retirement.”
He added: “We think that the wealth management industry is in a pretty good position over the medium to long term, we got a chance to buy what we think is a really good business at a reasonably attractive valuation caused by the weakness in equity markets last year.”
The other stock that Morton bought for the Franklin UK Equity Income fund was Johnson Matthey, the UK-based specialist chemicals company.
“Johnson Matthey is basically much more of an international business, the world leader in catalytic converters for both diesel and petrol engines,” he said. “But also it has got some really exciting battery technology coming along as well.”
This stock was hit by fears over global growth at the end of last year and long-term concerns over diesel and petrol car industry.
Performance of stock over 1yr
Source: FE Analytics
However, Morton thinks people are missing the point of this company, which is that it is a world leader in what it does and a lot of its business comes from emerging areas such as China.
“What Johnson Matthey does is provide a solution to curtail emissions and pollution, which must be a good thing in the world that we’re now living in and the political agenda that’s out there,” he added.
“But of course, people are more worried that eventually we won’t have any petrol or diesel cars and I’m sure that’s eventually the case, but I think that’s maybe a number of years away.
“And I think maybe people are getting a bit too negative about a company like this.”
Morton (pictured) said he was able to pick up the stock at 30 per cent below where it was trading last year because of the long-term concerns over the future of the car industry.
“I’m not denying that there are some risks; there’s some uncertainty there,” he said.
“But the fact is I can buy this company on a significant discount to where it usually trades and you have that as an opportunity as well.”
The £732.8m Franklin UK Equity Income fund has made a total return of 807.84 per cent since Morton joined in 1995, compared with 543.14 per cent from the average IA UK Equity Income fund and 521.25 per cent from the FTSE All Share index.
Morton runs the UK equity income strategy alongside co-managers Ben Russon and Mark Hall. It targets a growing level of income higher than that of the FTSE All Share along with capital growth over the medium-to-long term (three to five years)
Performance of fund vs sector & index under Morton
Source: FE Analytics
It has a yield of 4.52 per cent and an ongoing charges figure (OCF) of 0.52 per cent.