Matt Roche, of investment manager Killik, said the FTSE 100 has suffered smaller losses than many other global markets this year, thanks to share gains in oil and gas companies.
“UK stocks are enjoying their time in the sun,” he said. “Our market has been skewed towards a limited number of sectors, such as energy, mining and banking, which have all performed exceptionally well this year. Companies like BP and Shell have performed very strongly thanks to rising oil prices.”
Mr Roche also highlighted the health sector in London, where pharmaceutical giants AstraZeneca and GlaxoSmithKline are world leaders. “Healthcare is a great area to invest in because a lot of the spending in this area is not discretionary,” he said. “This makes it a robust, defensive investment.”
A simple FTSE 100 tracker is a cost effective way to invest in the largest listed companies in London. The iShares Core FTSE 100 is a popular option, with an ongoing cost of 0.07 pc. per year.
The funds designed to keep your money
For more conservative investors, funds designed to help preserve your money during periods of economic and political stress may be preferable.
Popular “wealth preservation” trusts include the Ruffer Investment Company, which had invested nearly 11 percent of its assets in gold. The yellow metal is traditionally seen as a safe depository of value during economic downturns and has helped bolster the trust’s performance this year. In the past three years, Ruffer has provided investors with returns of 41 percent.
The City of London investment trust is another popular option, not least because of its dividend record. It has increased its payout 56 consecutive years and has a return of 4.9 pc. You can find a complete list of The Telegraph’s favorite defensive funds here†
Invest in bricks and mortar
Investing in ‘real’ assets has become an increasingly important defensive strategy for investors in the current environment. This involves investing in tangible projects such as infrastructure and real estate, which can help diversify a portfolio away from just traditional stocks.
Luke Hyde-Smith, of investment manager Waverton, said the real estate sector was a popular option. “Investments in real estate and other real assets are very attractive because they have a robust level of cash to back them up,” he said. “Some real estate mutual funds also have inflation-linked income and are less dependent on the health of the rest of the economy.”
Mr Hyde-Smith highlighted Supermarket Income Reit, which leases commercial properties across the country to supermarkets such as Tesco and Morrisons. The £1.2bn trust has delivered a 32 percent return over the past three years.
Mr Hyde-Smith said the infrastructure sector also provided investors access to valuable real assets. He highlighted SDCL Energy Efficiency Income confidence, which has returned 24 percent in three years.
“Everyone is talking about moving to renewable energy away from fossil fuels,” he said. “But not everyone focuses enough on how much energy we waste. This is a great opportunity, especially since electricity prices are now more expensive. Both consumers and businesses are trying to be more efficient with energy and that requires more investment in our infrastructure.”