With the path to Brexit still uncertain, it remains difficult for investors to know how to manage their portfolios. As such, The Share Centre’s Ian Forrest has highlighted 15 investment ideas that should cover any Brexit outcome. 
Soft Brexit
If a deal gets through Parliament, said the investment guidance analyst, there is likely to be a rebound in investment spending and consumer confidence which would likely result in GDP growth.
Forrest said that the Bank of England would likely raise rates resulting in higher gilt yield and strengthening sterling.
It’s not all good news, however. The FTSE 100, said Forrest, “probably won’t be able to shake off the drag from the global growth slow down and trade tensions, making returns more challenging this year”.
As such, for more aggressive investors aged 20-40 willing to take a higher level of risk, the analyst said there were several interesting options.
First up is the £78.7m LF Miton UK Smaller Companies, overseen by industry veterans Gervais Williams and Martin Turner, which targets long-term returns by investing lower down the market cap scale.
“This fund will be more aligned with the growth prospects of the UK domestic economy and may provide a buffer against a volatile global economy, should soft Brexit or no Brexit prevail,” said Forrest.
Performance of fund vs sector since launch
Source: FE Analytics
Since launch in December 2012 to 21 October 2019, the fund has made a total return of 82.71 per cent compared with a 112.44 per cent gain for the average IA UK Smaller Companies peer.
Another recommendation for more aggressive investors in a ‘soft Brexit’ scenario, is AIM-listed online fashion retailer Boohoo, which Forrest said should benefit from any pick-up consumer confidence “once the cloud of uncertainty fades away”.
For investors aged between 40 and 60 years old, looking for a mixture of income and growth Forrest recommends the TR Property Investment Trust and DB X-Trackers FTSE 250 ETF (exchange-traded fund).
The £1.7bn TR Property Investment Trust is managed by Marcus Phayre-Mudge and focuses on acquiring assets with future growth and capital appreciation potential rather than immediate initial yield or discount to asset value.
“Should a deal be passed by Parliament, the uncertainty and volatility imposed on the property trust would be eased,” said Forrest.
Over the past three years, the trust has made a total return of 62.93 per cent compared with a gain of 22.33 per cent for the FTSE EPRA Nareit Developed Europe benchmark.
Meanwhile, Xtrackers FTSE 250 ETF replicates the mid-cap UK equity benchmark and should benefit from any rebound in investment spending in the UK and a general pick-up in activity for UK-focused companies.
Finally, retired and low-risk investors might be tempted by the £1.4bn Rathbone Ethical Bond fund managed by Bryn Jones and Noelle Cazalis. Rathbone Ethical Bond, which has quarterly distribution, targets regular, above-average income from bonds that meet its strict financial and ethical criteria.
The five FE Crown-rated fund has made a total return of 18.27 per cent over the past three years compared with a 10.81 per cent rise gain for the average IA Sterling Corporate Bond peer.
Hard Brexit
Should the UK crash out of the EU without a deal, “the damage could be substantial”, The Share Centre analyst said.
Consumer confidence would dampen even more and growth would slip further, according to Forrest, while the Bank of England would likely cut interest rates. Internationally focused FTSE 100 companies would perform better than smaller companies as sterling weakened.
“Hard Brexit could be a one-off shock and growth could then get back on track – although how quickly the economy could rebound would heavily depend on how policymakers responded,” he said.
For more aggressive investors, Forrest recommended the L&G Robo Global Robotics & Auto ETF, given that Brexit is unlikely to slow the march of technology globally. Over the past three years, the passive strategy has made a total return of 35.3 per cent.
Investors looking for a mixture of income and growth might benefit from strategies such as Artemis Income and Schroder Income.
Performance of funds vs sector over 3yrs
Source: FE Analytics
The £5.6bn Artemis Income former is overseen by Adrian Frost, Nick Shenton and Andy Marsh and aims for a rising income with capital growth with a large-cap bias. The four FE Crown-rated, £2.2bn Schroder Income fund, meanwhile, is overseen by Kevin Murphy and Nick Kirrage and also has a bias towards large-cap UK names, albeit those able to generate income globally.
Two potential stock names for this group of investors are alcoholic drinks company Diageo and pharmaceutical company AstraZeneca as global demand for their products should leave them relatively unscathed from a hard Brexit.
Finally, retired and risk-averse investors looking for income, Forrest recommends Legg Mason IF RARE Global Infrastructure Income and First State Global Listed Infrastructure.
Both investing in global listed infrastructure assets, the team-managed, £525.4m Legg Mason IF RARE Global Infrastructure Income has a greater emerging markets focus, while the five FE Crown-rated First State Global Listed Infrastructure fund – overseen by FE Alpha Managers Peter Meany and Andrew Greenup – is mainly listed in developed markets and North America in particular.
Over three years, the Legg Mason fund has returned 23.32 per cent while the First State fund is up by 20.82 per cent.
No Brexit
In a scenario where Brexit is cancelled, a heavy inflow of investment capital would likely flow back into the UK and GDP would pick up faster than expected.
While the UK market would likely rally in the event of Brexit being cancelled, Forrest chose a non-UK fund as his preferred choice for aggressive investors.
The £286.3m Stewart Investors Indian Subcontinent Sustainability fund – managed by FE Alpha Manager David Gait and Sashi Reddy – invests in companies that are based in or have significant operations in India, Pakistan, Sri Lanka or Bangladesh.
“Consideration is given to investment in companies that are positioned to benefit from, and contribute to, the sustainable development of the countries in which they operate,” said Forrest.
Performance of fund vs benchmark over 3yrs
Source: FE Analytics
The fund has made a total return of 11.25 per cent over the past three years compared with a rise of 14.93 per cent for the MSCI India benchmark.
For investors aged between 40 and 60, The Share Centre analyst recommended the £1.1bn LF Miton UK Multi Cap Income fund.
“It was set up in anticipation that small- and micro-cap stocks would outperform the mainstream indices because they have a history of performing better than similarly sized growth stocks longer term,” said Forrest.
Also managed by Gervais Williams and Martin Turner, LF Miton UK Multi Cap Income should act as a good hedge against inflation, according to the analyst. Over three years, it has returned 13.5 per cent compared with a 12.52 per cent gain for the average IA UK Equity Income peer.
Finally, for retired investors looking mainly for lower-risk income ideas, the £209.1m Janus Henderson Index-Linked Bond fund – managed by Andrew Mulliner and Bethany Payne – would likely generate a return by providing protection against inflation.
Indeed, stronger sterling and GDP growth could spur inflation and prompt the Bank of England to raise rates sooner than anticipated, according to Forrest. During the past three years, the four FE Crown-rated fund has made a 4.75 per cent return compared with 7.09 per cent for the FTSE Actuaries Index-Linked Gilts Over 5 Years benchmark and a 5.81 per cent gain for the average IA UK Index Linked Gilts peer.