Investors often stick to their home shores, but picking international stocks has never been easier

Time flies when you are having fun. Believe it or not, next Tuesday will mark four years since Britain voted to leave the European Union.

No, we haven’t got our street party organised yet, either. Whether you regard Brexit as a matter for celebration or commiseration, it should give investors pause for thought.

Sad to say, British shares and funds have lagged behind their continental cousins since the referendum, returning only a third of the income and growth seen on the other side of the Channel. According to the Investment Association, UK All Companies funds delivered a total return of 13% over the four years to last week, compared with 39% from Europe ex-UK.

Bank, mining and oil stocks dominate the big companies on the London market, which has done nothing to help performance. Britain’s corporate tiddlers did much better, with UK Smaller Companies funds returning an average of 31% since the referendum. However, even at the smaller end of the market, Europe remained ahead with its corporate tiddlers returning 36%.

……  Viewed positively, British funds and shares might prove relatively good value at current prices. Perhaps investors should consider following the example of shoppers who queued up on Monday to bag bargains when non-essential retail stores reopened.

After all, buying low is the traditional first step toward making a profit. That is the view of Alan Steel at the Scots independent financial adviser of that name, who said: “The Maastricht Treaty is a straitjacket for most of the EU.

“Europe has many challenges ahead, but the UK isn’t constrained in the same way and our currency is free of Euro worries too. Contrarians — or investors who like to buy when others sell — will love the fact that the UK is being rubbished by the herd.”

……  Like any rational inhabitant of the United Kingdom, I sincerely hope that our economy recovers, but it remains to be seen whether optimists are looking at the statistics through red, white and blue glasses. Either way, with less than a fortnight left before the next deadline for talks about how we will trade with Europe after the Brexit transition period ends, we won’t have to wait long to find out.

Britain’s exit from the biggest economic trading area in the world has followed a leisurely and haphazard path so far. But my guess is that events will begin to occur more rapidly in the six months left before talks must finish at the end of this year.

……  Brexit might yet prove to be the best thing since sliced bread. Perhaps the only fact that unites Brexiteers and Remoaners is that we simply don’t know yet.

Everyone is entitled to their own opinions but not their own facts. While optimists buy and pessimists sell, Mr Market will decide who is right.

As the saga of Britain’s departure from the European Union enters its final act, it would be a brave investor who bet all their life savings on a happy ending.  ……

Quote courtesy of the Sunday Times
Sunday 21 June 2020