Trustnet Magazine 49 March 2019 | Page 60

In the back 60 / 61 The problem is that a range of possibilities exist, with new ones frequently appearing, and the final outcome remains dependent on political expediency TB Amati UK Smaller Companies’ David Stevenson names three UK stocks whose structural drivers should persist regardless of what path Brexit takes Growing the distance and instead necessitates a blend of portfolio holdings which can cope with every eventuality. Perhaps even better is to include stocks which may be uncorrelated to any Brexit-related crisis. In the TB Amati UK Smaller Companies fund, we have attempted to achieve this blend through exposure to companies whose medium-term prospects are built on structural growth drivers that should persist in either overseas or domestic markets, whatever the Brexit saga brings. T he uppermost theme for many fund managers at the moment is how their portfolios will perform in whichever Brexit scenario transpires. The problem is a range of possibilities exist, with new ones frequently appearing, and the final outcome remains dependent on political expediency. This rules out a single-scenario investment approach Spirent provides perfor- mance testing solutions for data centres, telecoms networks, navigation satel- lites and mobile handsets. After developing systems for 3G and 4G technolo- gies, it is doing the same for 5G. The first 5G networks should go live in 2019/2020, with the US, South Korea, FE TRUSTNET Japan and China in the vanguard. Cyber security concerns surrounding 5G equipment manufacturer Huawei are an issue, but Nokia and Ericsson could take market share and Spirent is a supplier to both. Spirent’s prospects for the next two years are tech- nology rather than macro driven, and it fits the bill as an “uncorrelated” stock. [ STOCKPICKER ] OneSavings Bank (OSB) is among our favourite companies for domestic UK exposure as it will benefit from any set of circum- stances that would see fears of a “no deal” Brexit recede. OSB is predominantly a provider of mortgages to professional landlords. This is a specialist area of lend- ing in which smaller players have been taking market share as the larger banks have shied away from the complexity associated with new regulations when lend- ing to this type of customer. As a secured lender it is at the lower end of the risk spectrum. Much of its funding comes from retail deposits under the name Kent Reliance. Capital (a stock that we also own), Manolete gener- Manolete Partners is a ally buys the cases outright relative newcomer, hav- from the administrator for ing only floated on AIM a nominal sum, with a deal last December. The com- to divide the profits in the pany is a highly special- event the case is success- ised provider of litigation ful. This allows Manolete finance, trading only in the to stay in control of the UK and providing finance case, prevent costs from only in cases relating to in- ballooning and choose solvent companies. Unlike whether or not it wants to the better-known Burford settle. trustnet.com