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Brexit weighs on sentiment as investors go global

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Investor confidence recovered somewhat in January, but is still weighed down by Brexit uncertainty, according to investment platform Hargreaves Lansdown.

The FTSE 100 has seen some recovery following a turbulent end to 2018. It has regained the symbolic 7,000 level but remains widely unloved by investors. This is shown by its average dividend yield – now at around 4.5% and among the highest of any market in the world.

Investors are still looking outside the UK with funds focused on Asia and Emerging Markets among the most popular in January, data from Hargreaves Lansdown shows.

Just three UK-focused funds made its top 10 list last month – the Lindsell Train UK Equity, Threadneedle UK Equity Income and Marlborough Multi-cap Income funds. It was a similar picture in the investment trust sector. Although the UK-focused City of London trust got the top spot, global trust Scottish Mortgage, Murray International and JP Morgan Emerging Markets were all popular with investors.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Market sentiment is still weak though, and against that backdrop, investors are leaning more towards income options to fill their ISA portfolios. Little wonder when the yield on the UK stock market has reached levels not seen since the financial crisis. Of the ten most popular shares bought in January, eight have an expected yield above 5%. Meanwhile four of the ten most popular funds have an income objective, that’s up from just two last year….Dividends also tend to be more stable than share prices, because companies are loathe to cut them unless conditions are extremely unfavourable.”

Khalaf added that investors need to ensure fears over Brexit don’t derail their long term financial goals: “No-one knows how withdrawal from the EU will proceed from here, so a diversified portfolio is more important than ever to ensure not all your eggs are in one particular Brexit basket.”

Most popular ISA funds, shares and investment trusts with Hargreaves ISA clients

Active Funds (Alphabetically) FTSE 100 Stocks Investment Trusts Trackers (Alphabetically)
First State Asia Focus Lloyds Banking Group plc City of London Investment Trust HSBC FTSE 250 Index
Fundsmith Equity Aviva plc Scottish Mortgage Investment Trust Legal & General European Index
JPMorgan Emerging Markets BP Plc Finsbury Growth & Income Trust plc Legal & General International Index Trust
Lindsell Train Global Equity Royal Dutch Shell Plc B Shares Edinburgh Investment Trust plc Legal & General UK Index
Lindsell Train UK Equity Vodafone Group plc 3i Group plc Legal & General US Index
Marlborough Multi Cap Income Smith (DS) Murray International Trust plc
Newton Global Income GlaxoSmithKline plc Merchants Trust plc
Royal London Sterling Extra Yield Bond GVC Holdings plc JPMorgan Emerging Markets IT plc
Schroder Tokyo Unilever plc Lindsell Train Investment Trust plc (The)
Threadneedle UK Equity Income British American Tobacco plc F&C Investment Trust plc



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