Partner Insight: Gavin Launder, Lead Fund Manager of the Legal & General Growth Trust, discusses how managers can navigate the spectre of protectionism
UK investors are being forced to contemplate some tough decisions. With Brexit and the uncertainty around global trade tariffs posing a risk to the economic and equity market outlook, outflows are mounting. In fact investors withdrew more than £1bn from UK equity funds in May, according to the Investment Association.
Gavin Launder is the Lead Fund Manager of Legal & General's Growth Trust. He says: "The overriding uncertainty has been unhelpful. Aside from fears of rising global protectionism, recent central bank announcements also reminded investors that the outlook for the global economy, whilst still positive, is less synchronised than it appeared a couple of months ago."
Identifying growth companies
Launched in 2000, the Legal and General Growth Trust is a UK equity strategy which typically aims to invest in companies delivering growth that is ahead of the market without sector or stock constraints.
He adds: "In some cases the trade wars are quite real, whether it's tariffs with China or with Turkey. But a lot of it is Donald Trump posturing ahead of the mid-terms. It hasn't affected our allocation decisions. Our positions in the fund remain the same but we are monitoring developments closely.
"One of the problems about a global trade war is that it tends to hit the emerging markets quite hard. The currency gets sold off and that tends to affect the financial sector much more than any other sector."
Despite this backdrop, the relative resilience of UK indices suggests a strong value case for UK equities. Sterling weakness provided another helping hand to international earners, while the UK market was the big relative winner from the rallying oil price following May's OPEC meeting. LGIM's size means that they have extensive access to companies.
The Growth Trust invests in 25, broadly equally-weighted positions, adopting a ‘one in, one out' approach to stock selection. This means only their highest conviction ideas appear in the portfolio.
Click here to learn more about how LGIM invests in their best ideas, without sector or stock constraints
