A trio of British investment ideas that could put you in pole position
Ian Forrest, Investment Research Analyst at The Share Centre, provides investors with a trio of British investment ideas that could keep investors on track ahead of this weekend’s British Grand Prix:
"To celebrate one of the country’s most prestigious sporting events, we have selected three British investment ideas that cover equities, funds and investment trusts to provide investors with the diversification they may require in the current market volatility:
AB Dynamics
“This Wiltshire-based company is the first to line up on our starting grid. AB Dynamics provides advanced testing and measuring services to the car industry and it has been benefiting from an increased growth in spending by car manufacturers on research and development. This is due to governments and drivers striving for safer and more comfortable cars. It’s an especially exciting time for the group given its potentially rewarding linkup with Williams Advanced Engineering, part of British Formula One team owner Williams Group, to produce a ‘driver in loop (DIL) simulator’ which can be used to test a car's dynamics and safety.
“Since we upgraded the company to a ‘buy’ in October 2015, the share price has rocketed by around 100%, as a result of positive trading updates, our research note and a lack of liquidity in the market. This is a small company, which has developed a niche for itself over a number of years, on a global scale. Its size subsequently means it is a higher risk AIM company geared to growth which, as a result of a solid balance sheet and cash generation, has also allowed it to increase dividend pay-outs.”
City of London Investment Trust
“The company’s objective is to provide long-term growth in income and capital, principally by investment in equities listed on the London Stock Exchange. The latest fact sheet published at the beginning of March stated that the portfolio currently consisted of 115 holdings, with 88.6% exposure to the UK and main sectors including Financials, Consumer Goods and Consumer Services. Due to this exposure, the company would have had to briefly pull in to the pits post Brexit to reassess but putting that aside, the managers believe the UK looks as though it is firmly in recovery albeit we remain of the opinion that growth is likely to be low for some time to come.
“This trust is probably more suitable for investors who are looking for a steady income stream from a large and liquid mainstream UK equity-focused trust. City of London has one of the longest track records for continuous dividend growth, dating back nearly fifty years, helped by one of the advantages that investment trusts have, the ability to use revenue reserves in difficult times.”
CF Woodford Equity Income fund
“On the front row of the grid would be the very reliable Neil Woodford and the CF Woodford Equity Income fund. Investors continue to want to benefit from the expertise and knowledge of one of the industry's most highly respected fund managers. This fund may be suitable for income investors that are seeking a 'steady as you go' manager with a strong, long and reliable track record and the ability to provide a rising level of income
“Whilst the core of this portfolio is defensive and less susceptible to extreme market volatility, Woodford has remained firmly of the belief that small and occasionally unlisted companies in the UK have the potential to be successful and is therefore prepared to also invest in these. Such companies will only constitute a very small part of the overall portfolio however, they can be pivotal to the fund’s journey and potentially add excitement and punch.”