Eight funds to capitalise on Autumn Statement fallout

This year's Autumn Statement was notably short on rabbits, and long on promises of funding for infrastructure including affordable housing, digital infrastructure and local transport projects.

It was also, however, hedged about with downbeat predictions of slowing growth for UK plc over the medium term, as uncertainty over the reality of Britain's exit from the EU prevails.

So what could chancellor Philip Hammond's pronouncements mean in terms of new opportunities for businesses, and the fund managers investing in them? Or should his views be taken as confirmation that better investment opportunities await beyond the UK?

We asked some industry experts for their reaction to the Autumn Statement, and the funds they favour as a consequence.

Focus on global growth

Alan Steel, managing director of Alan Steel Asset Management, says the whole thing was something of a "damp squib", and is therefore sticking with his focus on the global growth sector.

"Value is making a comeback, and I like James Harries, now at Troy Global Income, for a mix of rising income and steady growth," says Steel. "He's both a thinker and a safe pair of hands." He suggests James Thomson at Rathbone Global Opportunities, "also a thinker', as a growth-focused alternative.

The Autumn Statement underlines quite how grim the British government's finances areIn value terms, Steel sees value in smaller companies funds, particularly from managers who themselves are looking for value.

"Gervais Williams [manager of Miton UK Smaller Companies fund and the Diverse Income trust] could be good to tuck away," he adds.

Jason Broomer, head of investment at consultant Square Mile Investment, is also wary of the UK. "The Autumn Statement underlines quite how grim the British government's finances are and the potential for upset if May/Hammond make a complete Horlicks of the Brexit process," he comments.

Broomer, too, is looking to global alternatives, and highlights Fundsmith Equity as a sound choice. "It's been a worryingly popular fund of late, investing in companies that have robust global franchises and solid balance sheets.

"We don't know what the future holds but many of these companies have been around for many decades and should continue to be with us for some time regardless of how the political situation develops.

Polar Global Insurance invests in around 35 firms with long records of shareholder value"These companies are expensively priced in the market, but we feel that the premium is justified for the certainty they offer in such an uncertain world.

"The fund is likely to be left behind in any strong market advance but it should prove to be more resilient than others in difficult conditions," he says.

As a less mainstream alternative, Broomer suggests Polar Global Insurance. "The fund focuses on US property casualty insurance businesses (car/home insurers and the like) and the managers invest in around 35 companies which have a consistent record of generating long-term shareholder value. This has been reflected in some strong and steady returns for fund investors.

"Unfortunately, these firms cannot yet offer investors policies to insure themselves against the multiplying political risks in the UK and US," he adds.

UK opportunities

Adrian Lowcock, in contrast, believes the chancellor's plans for a "National Productivity Investment Fund" will create UK opportunities.

He warns that the NPIF is "not exactly a spending splurge"; but, he says, "the popularity of infrastructure as an asset class amongst investors suggests there should be plenty of capital available in the private sector to support additional investment into infrastructure".

Given that inflation is set to rise in the UK, government-backed infrastructure investments with built-in increases in payouts and predictable cash flows "are likely to attract strong demand from private investors".

Woodford is passionate about small UK tech firms and spends most of his time researching themFor exposure, Lowcock likes the John Laing Infrastructure fund, yielding 5.3%, which invests across a range of projects and sectors.

"It offers a diversified source of returns compared to equities and bonds, and a more predictable, inflation-protected yield."

JO Hambro UK Equity Income is an alternative with exposure to sectors set to benefit from an infrastructure stimulus, including construction and materials. It has a bias to small and mid caps "where the potential for future earnings and dividend growth is under-appreciated", according to Lowcock.

Lowcock also homes in on the chancellor's announcement of a planned review to help start-up technology firms growth rather than being taken over by the big boys before they have had chance to realise their full potential.

For a long-term perspective on small, growing UK technology companies, he picks out Woodford Patient Capital trust, run by Neil Woodford, which focuses on exactly that market.

"Woodford is passionate about this area of the market and spends most of his time researching and analysing companies. He has a strong established process with a focus on cashflow," he adds.

For our news coverage and expert analysis on the chancellor's maiden set-piece budget speech and its repercussions, make sure to check out Interactive Investor's Autumn Statement hub.

This article was originally published by our sister magazine Money Observer here

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.