But can this latest wave of "cool Britannia" rub off on other, less glamorous British companies?
Justin Urquhart Stewart of Seven Investment Management thinks so. "Events like the wedding give a short-term boost to some companies. It helps to reinforce a positive view of the UK," he said.
It wasn't just haute couture brands that benefited, he added. Diageo, the drinks manufacturer, led the way with high-end goods - in this case with spirits such as Tanqueray gin and Johnnie Walker whisky. This company, he said, is still a good investment, not least because its products are so popular worldwide.
"We tend to have a negative view of the UK. But it is often very different overseas," Mr Urquhart Stewart said. "We take for granted our stability and our heritage, but many successful UK companies trade on that, and events such as the recent wedding and the Olympics will help bolster this view."
As with all investment decisions, diversification is key. Mick Gilligan of stockbrokers Killik & Co said: "There are UK companies and UK funds that look undervalued and could be a good investment bet."
One company Mr Gilligan likes is Cobham, the engineering firm that designs and manufactures aerospace and defence systems. While it might not seem to have much in common with handbag retailers, both rely on overseas demand to drive profits.
He is also positive on Tesco, again thanks to its expansion overseas. But given the current economic climate at home, he is bullish only about food retailers, so isn't currently tipping that other classic British brand, Marks & Spencer.
Looking closer to home, Mr Gilligan said both Lloyds Banking Group and National Grid had the potential to deliver good investment returns and grow their dividend streams. "Lloyds looks like a pretty cheap stock considering it has 30m customers."
For most investors, buying individual shares remains a high-risk game. Funds are more diversified, and there are a wide range investing in British companies. But, as Mr Urquhart Stewart pointed out, don't assume that investing in a FTSE 100 or FTSE All-Share fund means you are "buying British".
London is a very international stock exchange, he said, with more than half of the profits generated by FTSE-listed companies coming from overseas. "In many ways it is a commodities and mining index. This goes back to our strengths: stability, compliance and corporate governance. Would you rather put your money with a Kazakhstan mining start-up or a big international mining company that is listed in London but operates mines in that region?"
Ben Yearsley of Hargreaves Lansdown said: "Over the long term I believe emerging markets will have the growth story. But the UK market, particularly larger blue chips, remains attractive for those seeking less volatile investments and wanting to secure a dividend income."
He added: "Short term, the UK market does look cheap." Darius McDermott of Chelsea Financial Services said: "UK and global markets have had a strong run. While the UK economy may be floundering, stock markets do not move in line with GDP, and investors shouldn't forget there are many great British companies making things that the parts of the world with stronger growth need." The relatively weak pound has helped facilitate this.
There are funds that focus on "buying British". Unicorn Asset Management's �8m Outstanding British Companies fund has delivered a 52pc return over the past three years, against an average 15pc in the UK All Companies fund sector. Over the same period the FTSE All-Share delivered a 17pc return.
The fund usually holds between 30 and 50 British stocks. A spokesman said: "These are British companies providing niche services or products in areas where there is a high barrier to entry."
Among its bigger holdings are Advanced Medical Solutions, which makes skin glue. The fund also invests in Domino Printing, a hi-tech company that prints expiry dates on eggs, Rolls-Royce and Devro, which manufactures sausage skins.
Fund manager John McClure said: "People say British industry is dead, but our performance to date indicates that this is not the case. Most of the companies we invest in derive the majority of their revenue overseas.
"This is because we don't believe that GDP growth is coming from the UK, but companies here are well positioned to benefit from growth in other regions."
No comments:
Post a Comment