MR MONEY MAKER: Firm foundations for future gains in your portfolio with building suppliers
Don’t confuse lockdown with shutdown. Yes of course the pandemic has meant that we have all had to go through severe economic and personal restrictions, but you will be aware that some areas have had a very successful time and even prospered.
Of course, we are all familiar with the online and tech sector businesses that could have been designed for such an appalling event.
However, there are also some other less fashionable areas – namely, the building trade.
Building for the future: Many of us have been busy building stuff during the pandemic, instead of buying stuff as usual
Why Does It Matter?
One of the unexpected side effects of the lockdowns has been the astonishing rise in the level of savings. Essentially, if you were still in work and being paid, you are almost certain to have spent less.
Even the enthusiastic British consumer can only buy so much ‘stuff’, and of course we have not been able to spend on meals out, weekends away or even our vital annual holiday.
In focus: The Government has put housebuilding in its sights
The result has meant that many of us have looked closer to home – and to improve it (hopefully with professional help). In fact, many have taken this time to get the builder in to create that intended extension, or develop the loft. So, many of us have been busy building stuff, instead of buying stuff as usual.
Add to that the Government plan for a dynamic house building programme – whether it comes to fruition is another matter, of course – and we can see that anything to do with housing is going to see some greater attention.
What Should I Do?
I could suggest we look at the house builders themselves, but I have an inbuilt suspicion of the industry and its companies. And I would rather not speculate on which is best, but instead invest what they are all going to need – the materials themselves.
Here is a company which is hardly a household name: Marshalls plc. From its founding in 1890, it has been primarily focused on the UK but now supplies products to over 50 countries.
I was also pleased to see its emphasis on environmental issues so I can tick the now vital ESG (environmental social and governance) box for investments. Its price is well off its high in December 2019 of £8.68, and is now better value at over £7.
For a less risky approach to this vital sector a broader European view would be better and the iShares STOXX 600 Construction & Materials passive ETF fits the bill.
If governments are going to spend more on infrastructure and building more houses then suppliers are not ‘nice to haves’ but become ‘must haves’.
Justin Urquhart Stewart co-founded fund manager 7IM and is chairman of investment platform Regionally.