Home Stock Market How I’d invest £20k in the FTSE 100 today – The Motley Fool UK

How I’d invest £20k in the FTSE 100 today – The Motley Fool UK

by callingemout
One English pound placed on a graph to represent an economic down turn

Many investors, including myself, choose to invest in FTSE 100 companies. The companies that make up this blue-chip index are some of the biggest businesses in the UK, and indeed the world.

As more than 70% of the index’s profits come from outside of the region, this is more of a global index than a UK-focused benchmark.

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This is not a bad thing. It gives exposure to the global as well as the UK economy. As such, it can help investors diversify away from their home country.

It also offers a way to invest in the global economic growth story after the pandemic.

With that being the case, I have been looking for investments in the blue-chip index to buy for my portfolio with a lump sum of £20,000 today.

I believe a couple of companies are in a perfect position to capitalise on the recovery, thanks to their large economies of scale and world-beating positions in their respective markets.

Global footprint 

The first stock on my list is the commodity trading group Glencore. This is the largest trading company in the world, buying and selling commodities around the globe. It is also the world’s largest wheat trader.

As the global economy recovers from the pandemic, this business is in the perfect position to benefit from increasing trade flows worldwide.

It also provides a high level of protection against inflationary forces. Commodity prices tend to match inflation in the long term.

Some of the risks associated with this company include a high level of debt and regulatory factors. These could hit its growth if interest rates rise significantly, or if regulators decide to clamp down the commodity industry.

FTSE 100 wealth manager

Closer to home, I would also acquire the wealth management group St. James’s Place. The FTSE 100 financial services company is uniquely positioned to capitalise on the growing wealth of the UK market over the next couple of years.

It is becoming increasingly costly to provide wealth management services in the country. This means power is consolidating in the hands of a few wealth managers. St James’s Place is perfectly positioned to capitalise on this trend.

Unfortunately, it is also exposed to new regulations and rising wage costs, which could hit profit margins in the years ahead.

Construction sector

Ashtead also has all the qualities I am looking for in an FTSE 100 investment. The company rents construction equipment to builders in Europe and North America.

This industry is currently firing on all cylinders, and there is tremendous potential for the business over the next couple of years.

Unfortunately, the market is also highly cyclical. If growth slows in the sector, the corporation will have to deal with a sudden slowdown in sales and profitability.

This could have an impact on its growth potential. Despite this risk, I would be happy to add the FTSE 100 company to my portfolio today, considering its reputation in the industry and expansion potential over the next 10 years.

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Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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