Equity investors should be bold, use 'bottom up' approach post-Brexit, says veteran analyst

In a post-Brexit world, UK equity investors should adopt a 'bottom up' approach to investing - for example, an emphasis on the analysis of individual stocks, hypothesise which companies are viable enough to be around in five years' time and let that temper their risk aversion rather than follow a herd metality, according to Richard Hunter, head of research at Wilson King Investment Management.

Speaking to IBTimes UK, Hunter - who has nearly four decades of experience in investment research and management - opined that most die-hard investment principles remain exactly the same in the current volatile climate.

"You are looking at strong, cash generative, stable businesses with geographical diversity – and those kinds of businesses, of which there are many in the FTSE 100, tend to have higher dividend yields."

"Markets can deal with bad news, but we're not at the stage yet. What markets hate is uncertainty, which is where are at the moment, a month on from the Brexit-vote. So people are making fingers in the air guesses about which sector could, rather than will be, worst affected."

The former Hargreaves Lansdown, Natwest Stockbrokers and Fyshe Horton Finney expert said the three sectors he would look to invest in would be pharmaceuticals, utilities and consumer staples.

"You have got to look at the pharmaceutical companies even if you don't buy the cliché that they're recession proof. These day's big pharma is what it says on the tin, where participants run their affairs like well-oiled businesses. We have incredible leaps and bounds currently being made in science. We find evidence of the genetic science aspect of their business being in a great place. Big pharma is also fairly aggressive on the mergers and acquisitions front."

"Away from pharma, if you are really risk averse, then utilities would be an option. They are incredibly dour businesses but are also pretty cash generative and tend to give high dividend yields. Finally, consumer staples, household products, etc. remain options that'll keep your portfolio ticking nicely."

Moving beyond these sectors is going to depend on individual investors' appetite for risk and the old adage of buying low, Hunter said.

Banks and housebuilders are under pressure, but that pressure is based on a hunch that headwinds are on the way in terms of house price declines and a potential removal of the European banking passport from British banks.

"However, truth be told, it is too early to tell the direction of travel and there is very little economic data. Even the Bank of England admitted as much in deciding to hold fire on interest rates this month. At a time like this being bold in making your choices, rather following a herd mentality, should be the order of the day."