**Rachel Reutter and Michael Ulrich** \Senior Fund Managers
UK equities are boxed off under three egregious misconceptions.
1. Active vs Passive Investors see the UK market has dominated by active managers and see valuations as being the logical result of fundamental research. This is not the case. The market is dominated by passive funds and valuations are determined by robots. 2. Low Growth The market is overshadowed by supersized stocks in the FTSE 100 and the assumption is that they reflect the market as a whole. But if we look at the number of companies, rather than capitalisation, we see that the UK is a highly diversified market. 3. Deep Value See above. The predominance of supersized value stocks overshadows the entire market, with many investors holding the misconception that the UK is nothing other than ‘deep value’.
Contrary to these misconceptions, the UK market is distinctly varied and offers investors a wide range of excellent choices with diverse sources of growth and income. Sectors where the UK leads are likely to increase in importance in the future, including energy transition, pharmaceuticals, defence, infrastructure and natural resources. Valuations are low, attracting significant interest from private equity funds.
UK experiencing high levels of M&A
The UK market is distinctly varied and offers investors a wide range of excellent choices with diverse sources of growth and income.
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