eToro
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Brexitproof your investments – go on the defensive

Deal or no deal, no one really knows what will happen to financial markets in the days after the UK leaves the European Union – but there are places to hide should they get really choppy.

A set of stocks classed as “defensive” do just what they say on the tin: they defend your investments in uncertain times, and luckily, the UK has a lot of them. Unlike fast-growing stocks that can double their value overnight – a tech company releasing a new gadget, for example – defensives will never be the shooting stars of a portfolio even in the best of times.

Instead, they are the kind of company that people rely on in their everyday lives – and it is their mundane characteristics that can help an investor out in markets that are lurching around.

No matter what the outcome of the Prime Minister’s talks in Brussels, people up and down the UK will still need to brush their teeth, turn the kitchen light on and take their blood pressure tablets.


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This means companies that produce toothpaste, electricity and life-saving drugs will continue to sell their wares and provide a reason for investors to hold their stock.

Unilever, which owns major personal care brands including Lynx and Signal, is classed as a defensive stock. Its lines also span a huge range of unremarkable goods that most people take for granted.

Others include electricity company National Grid, and AstraZeneca, which produces hundreds of medications for the NHS, pharmacies and healthcare regimes all around the world.

It might be surprising, but tobacco companies are classed as defensive stocks as are some booze brands – people rarely give up smoking and drinking in a time of crisis.

British American and Imperial Tobacco brands, which make Rothmans and Rizla respectively, and Diageo, the home of Johnny Walker and Baileys, are in this category, too.

These companies are all listed on the London Stock Exchange (LSE) and are some of the most traded stocks in the FTSE 100. While defensive stocks will not avoid losses should the entire market shift downwards, their characteristics mean they are less likely to drop as far as other companies producing goods and services classed as treats, such as new cars or holidays.

So, remember when investing in uncertain times that defensive stocks might be the answer: toothpaste may not be as exciting as a new smartphone, but think about which one you can survive the longest without.


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