No-deal Brexit the preferred option among DIY investors

Over a third of do-it-yourself (DIY) investors favour a no-deal Brexit, according to a poll conducted by The Share Centre.

Over a third of do-it-yourself (DIY) investors favour a no-deal Brexit, according to a poll conducted by The Share Centre.

In the survey of 3,000 investors, a total of 37% said their preferred resolution to Brexit would be leaving with a deal.

Last week, Parliament ruled out both Theresa May’s Withdrawal Agreement and a no-deal Brexit.

Instead, MPs opted for an extension of Article 50, allowing the UK to remain in the EU beyond 29 March. The government is currently in the process of requesting this extension, with the EU agreeing it is far from certain.

Most investors, however, appear to favour the seeming certainty of a no-deal exit.

Behind the 37% in favour of no deal, a quarter of investors favour a second referendum, with 19% saying they support renegotiation.

The least favourite option for investors was another general election, supported by just 3% of those polled.

According to Richard Stone, chief executive of The Share Centre: “It is clear personal investors don’t support the current deal that has been negotiated by the prime minister. When faced with the alternatives, perhaps surprisingly, personal investors favour leaving with no deal.”

The consensus is that a no-deal Brexit will broadly be negative for the UK economy and by extension the share prices of domestic-facing UK companies.

However, that does not mean there would not be investment opportunities.

First, with a no deal likely to see a sharp depreciation of the pound, the FTSE 100 will, in theory, benefit. Most companies on the blue chip index earn their money abroad. A weak pound will therefore inflate the FTSE 100’s earnings when converted it back into sterling.

An obvious way to play this would be to opt for a cheap FTSE 100 index tracker. However, The Share Centre suggests considering the Schroder Income fund. The fund is full of large-cap UK companies with global operations that generate income worldwide. That means it should be well positioned to benefit from a weak pound.

At the same time, as is often the case in market sell-offs, investors overreact and oversell certain companies. The Share Centre suggests investors take a look at Artemis Income, which looks for large companies that are undervalued. In theory, the market chaos of a no-deal Brexit should provide many value opportunities.

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