The UK housing market has received a huge boost from Government policy designed to encourage more people to take on mortgages. Some analysts and managers have warned that the surge could have run its course, but Brittain says that investors should continue to back the sector rather than trying to call the top.
"At the moment, the juggernaut just carries on," she said. "I can’t see the top coming but even if you don’t sell at the very top, that’s what we do rather than trying to second-guess the market."
Brittain practices momentum investing on her £170m trust, meaning that she buys what is doing well rather than looking for undervalued areas of the market that will rebound.
This means that she prefers to overrun the trend rather than sell out too early. However, she sees no signs of the market slowing down.
"We were in housebuilders last year and they did extremely well. We don’t think that story is over yet."
Improving consumer confidence means that the sector should continue to do well, she says, even though Taylor Wimpey and Travis Perkins, both top-10 holdings in the fund, have made more than 70 per cent over the past year.
Performance of stocks vs market over 1yr
Source: FE Analytics
She also owns estate agents Foxtons and Countrywide, both of which floated this year.
Countrywide is up 39.3 per cent since its IPO in March while the market has only grown 7.94 per cent. Foxtons floated in September and is already up 16.85 per cent.
Performance of stock vs index since March
Source: FE Analytics
Last week chancellor George Osborne floated a policy that could potentially undermine the upper end of the housing market.
Osborne suggested forcing foreign buyers to pay capital gains tax on the sale of second homes in an attempt to cool off the housing market in London.
Upmarket property company Berkeley Group was hit hard by the news, falling 4.46 per cent overnight. Brittain holds this stock in her portfolio alongside her other property-related stocks, which also took a hit, albeit to a lesser extent.
Performance of stocks over 1 month
Source: FE Analytics
Brittain says that while a company such as Berkeley could be hit in the short-term, Barratt and TW do not build for foreign buyers, so shouldn’t be affected.
She adds that even companies such as Berkeley should brush off the concern, as the tax won’t be enough to dampen foreign demand.
"The number-one reason foreign buyers come into the UK is they have contacts here and that doesn’t go away," she said.
She points out that when the Government raised stamp duty last year on homes worth more than £2m, it had no impact on demand.
Brittain is also running her winners in other areas of the market geared to consumer confidence.
She has easyJet and Thomas Cook in the leisure and travel sector, and pub companies too. Although stocks are bought on a bottom-up basis, she says sector weightings reflect the improving prospects for these companies from strong consumer demand.
She is also interested in retailers playing this theme and has Sports Direct in her top-10. It is another stock to have had an excellent run that Brittain isn’t selling.
This theme is a huge positive for the area of the market she invests in. While other managers and commentators have warned that mid caps are looking expensive, Brittain is unconcerned. Money continues to pour in, chasing the domestic recovery, she says.
"You are definitely seeing lots of interest in this area of the market, money coming in, and that’s hugely important as a support."
"People have finally got excited about the UK recovery and you get more coming through in the mid cap area rather than the FTSE 100."
"We are comfortable with consumer confidence and we can see those numbers picking up."
The JP Morgan Mid Cap Investment Trust has made 86.28 per cent over the past three years while the FTSE 250 has made 60.15 per cent.
Performance of trust vs sector and benchmark over 3yrs
Source: FE Analytics
This is more than all but one open-ended mid cap fund – Neptune UK Mid Cap, which has made 88.09 per cent. In NAV terms the JPM fund has made 71.4 per cent.
The other closed-ended mid cap fund, Schroder UK Mid Cap, has made much more in share price terms, but this gap narrows when NAV is considered. The trust has made 120.38 per cent in share price terms and 83.3 per cent in NAV terms.
The trust is still on a discount of 10.7 per cent compared with a three-year average of 15.81 per cent. Ongoing charges are just 0.66 per cent, according to the AIC.
