Chancellor Jeremy Hunt has unveiled plans for a British ISA, allowing UK savers an additional £5,000 ISA allowance per year to invest in the shares of London-listed companies.
While the move could be read as an attempt to prop up a market that has suffered in comparison with international rivals, seeing major companies lost to bids or decamping to overseas indices, not all investors are downbeat on the UK market.
In fact, some of the world’s best fund managers are alive to the UK’s investment opportunities.
The UK boasts 25 companies attracting a top AAA rating from Citywire Elite Companies as a result of their backing from these top investors. That’s behind only the US and India.
Of these, 22 would qualify for inclusion in a British ISA under the broad interpretation of UK companies the government is consulting on.
Here are the 22, each high-conviction positions for some of the top 3% of the more than 10,000 equity fund managers tracked by Citywire. The table is ranked by popularity with these Elite Investors.
AAA-rated UK Elite Companies
Source: FactSet. Return is share price return.
How Citywire Elite Companies works
Performance from these shares over the past year ranges from aerospace engineer Rolls-Royce’s (GB:RR) 151% return to miner Anglo American’s (GB:AAL) 44% share price loss. But an average 6.1% return from the 22 beats the FTSE All-Share’s 2.9% loss over the same period.
These companies would qualify for inclusion in a British ISA should the government opt for criteria that require only that a company is incorporated in the UK and listed, or admitted to trading, on the UK’s recognised stock exchanges: the London Stock Exchange, Aquis and Cboe Europe.
This opens the door to companies that derive the bulk, or even all, their revenues overseas despite their UK stock market listing and incorporation.
Among AAA-rated UK companies, FTSE 250-listed Bank of Georgia (GB:BGEO) unsurprisingly makes the bulk of its money in Georgia (95%), with the remainder in Belarus. Only 0.1% of mining giant Rio Tinto’s (GB:RIO) sales were made in the UK last year, and just 0.9% of British American Tobacco’s (GB:BATS).
At the other end of the spectrum, housebuilder Redrow (GB:RDW), the subject of a takeover bid from A-rated Barratt Developments (GB:BDEV), makes all of its revenues in the UK, while Premier Inn owner Whitbread (GB:WTB) makes 95.5% and supermarket chain Tesco (GB:TSCO) 93.3%.
