Investors concerned about the current UK and global political climate shouldn’t consume themselves with worry, according to the chief executive of Witan Investment Trust – a Moneywise First 50 fund for beginner investors.
It’s easy to open a newspaper and be consumed by nerves at the current political environment. From a seemingly trigger-happy North Korean dictator to a tweet-happy American president - we’re living in a turbulent time, which has an impact on our investment outlook and decision making.
But the tumultuous politics of 2017 should not, according to Andrew Bell, chief executive of Witan - which invests in companies around the world (global equities) - unduly unnerve or discourage investors from what has been a good year for global equities.
In a briefing given at an Association of Investment Companies event this week, Mr Bell said: “Equities are essentially a means of gaining exposure to the fruits from global economic growth so provided that 2018 continues the unexpectedly good and widespread growth experienced in 2017, time should be on the side of those invested in equity markets.
“People should not worry too much about politics – economic influences are usually more important for both economies and markets and globally these remain supportive of continued growth.”
He added: “Happily, we think that economics and technological change, in effect the working of the capitalist system, usually wins out over politics. We had some lollapaloozas of election results over the last year and a half or so, and clearly there is always a risk which can be quite difficult, but you can’t spend your whole time hiding under a stone or in a rabbit burrow worrying about war or a socialist government.”
However, Mr Bell cautioned that it’s still important to have a diverse portfolio, and points to Asia, Europe and emerging markets in general as having “improved”. “Geographic diversification is sensible to dilute the effect of rogue politics affecting a country or region and to take advantage of an increasingly broadly-based upswing.
“Rather than the US and nobody else, we’re seeing that in Asia, emerging markets generally, and Europe, generally speaking economic growth has improved. Perhaps the notable exception is the UK, which has the confidence impact of Brexit hanging over it. Our own sense is that we clearly have some local political worries in the UK in place related to Brexit and change in the centrist consensus on economics.
“But for a global equity manager that’s a very parochial concern, we’re maintaining a relatively bullish outlook for the world.”