Investors, particularly UK based investors, have had plenty to think about over recent weeks. On the global front, the build up to the US presidential election is gaining momentum and inevitably creating some uncertainty. Closer to home, worries over Brexit have resurfaced, with recent noises from both European and UK leaders raising concerns of a ‘hard Brexit’ involving the UK’s departure from the single market.
In sympathy, sterling has fallen against the dollar to levels not seen since the mid-1980s. While a weaker pound has a negative impact on UK companies with major overseas input costs, it is a significant positive for companies with overseas earnings. This dynamic has helped the stock market move higher.
The Evenlode portfolio is also benefitting from this trend given the global exposure of its underlying holdings, and geographic diversification continues to be a characteristic we like. For the long-term investor it lowers the risks political and economic events can produce at the national level, while also providing a runway for good growth over coming decades via expansion within newer markets.
However, we are open to the opportunities negative sentiment towards the UK may unearth. If sentiment continues to deteriorate, some names are likely to become more interesting to us on valuation grounds.