{"id":52249,"date":"2025-04-26T13:48:20","date_gmt":"2025-04-26T13:48:20","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/52249\/"},"modified":"2025-04-26T13:48:20","modified_gmt":"2025-04-26T13:48:20","slug":"wealth-managers-cut-uk-exposure-despite-cheap-valuations","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/52249\/","title":{"rendered":"Wealth managers cut UK exposure despite cheap valuations"},"content":{"rendered":"

UK equities are cheap, but the lack of potential good news on the horizon means other markets might be a better allocation for investors<\/a>.<\/p>\n

This is the view of James Burns, who runs \u00a33bn of assets within the model portfolio service at Evelyn Partners.<\/p>\n

In his latest portfolio rebalancing<\/a> summary, Burns said he has taken capital from within his UK equity allocation and deployed it to Asia<\/a>.<\/p>\n

He feels Asia and emerging markets are cheap market right now, despite the potential for trade wars, with scope for positive news to boost returns.\u00a0<\/p>\n

Burns wrote: \u201cThe probability of positive news flow, from China in particular, has increased. <\/p>\n

\u201cDespite the risks of an escalating trade war, there is a possibility that President Trump visits President Xi in Beijing to find a mutually beneficial solution that supports both the US and Chinese economies. <\/p>\n

\u201cThere are also signs that the technology sector is coming back into favour with Chinese leadership, as evidenced by President Xi\u2019s recent meeting with Jack Ma, the co-founder of Alibaba, the China tech giant.\u201d<\/p>\n

Overreacting markets<\/p>\n

Ben Seager Scott, chief investment officer at Forvis Mazars, has also reduced his UK equity exposure, although he has headed for the US.<\/p>\n

His view is that the market has \u201cover reacted\u201d by selling off US equities even as political risk rises, while the UK market rose by 2.8 per cent in the first quarter.\u00a0<\/p>\n

Seager Scott\u2019s view is that the rise in UK equity prices has happened during a period where the earnings outlook for UK-listed companies hasn\u2019t improved, and where the risk of a further economic downturn remains potent.<\/p>\n

With that in mind, he has sold some of his UK equity exposure, which he owned via an index fund, and instead deployed the capital into a US equity index fund.\u00a0<\/p>\n

The probability of positive news flow, from China in particular, has increased. <\/p>\n

James Burns, Evelyn Partners<\/p>\n

James Sullivan, head of partnerships at Tyndall, said the UK was \u201cunquestionably cheap\u201d, but that in order for an asset class to be a good investment it must not \u201cstay cheap\u201d.<\/p>\n

He explained: \u201cThere needs to be a spark. Our sense is that the tinder is in place and is very dry. <\/p>\n

\u201cEarnings looks very reasonable, companies are broadly in good health, and there appears to be a flight of capital out of the US market that needs to land somewhere. <\/p>\n

\u201cThe UK is so oversold, it won\u2019t take many crumbs from the US tech table to make a big difference to the rating and in turn, the performance, of the index.\u201d<\/p>\n

That said, he urged investors to recognise that the FTSE adds wonderful diversification benefits to a portfolio, justifying its inclusion as it did in 2022. <\/p>\n

Sullivan added: \u201cThe more value orientated, higher yielding, defensive nature of the constituents has an (often unappreciated) role to play. <\/p>\n

\u201cDiversification is a little like the airbag in our cars; we would be forgiven for not recognising the benefit until we need it, but it would be foolish to go for a drive without it.\u201d<\/p>\n

Catalysts to improve returns<\/p>\n

Ian Lance, who runs about \u00a35.5bn of UK equity money at Redwheel, including the Temple Bar investment trust, said: \u201cIn terms of catalysts to improve the returns from the UK market, takeover activity has been very significant, and share buybacks, which are becoming a big part of the market. <\/p>\n

The managers have shares in Barclays and NatWest, which were trading very cheaply, but went up 80 per cent last year. <\/p>\n

He said: \u201cNot that much changed within those companies, [their boards] just sat back last year and bought back their shares.\u201d\u00a0<\/p>\n

Recommended
\n <\/p>\n

\"Recommended<\/p>\n

Investors\u2019 confidence in the UK falls 28%<\/p>\n

<\/a><\/p>\n

Lance acknowledged that the UK market cannot exist forever in a cycle of companies exiting the market via takeovers, with no new companies joining, but said he felt there were a number of years yet before that becomes a major problem.<\/p>\n

He said he was more more concerned that UK companies are not sold off too cheaply, despite the negative sentiment towards the asset class right now.\u00a0<\/p>\n

Lance added: \u201cWe are very big shareholders in Curry\u2019s, the retailer. Last year Elliot bid 60p per share for the company. We advised the board that we thought the company was worth at least \u00a31 per share, so not to entertain the bid. <\/p>\n

\u201cThe board duly rejected the bid, Elliot came back with another, at 66p per share, and that was rejected as well. Now the shares are trading at over \u00a31.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"UK equities are cheap, but the lack of potential good news on the horizon means other markets might…\n","protected":false},"author":2,"featured_media":52250,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,4],"tags":[748,393,28011,28012,4884,1144,712,16,15,1764],"class_list":{"0":"post-52249","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-uk","8":"category-united-kingdom","9":"tag-britain","10":"tag-england","11":"tag-evelyn-partners","12":"tag-ft-adviser-vantage-point","13":"tag-great-britain","14":"tag-northern-ireland","15":"tag-scotland","16":"tag-uk","17":"tag-united-kingdom","18":"tag-wales"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114404583284042928","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/52249","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=52249"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/52249\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/52250"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=52249"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=52249"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=52249"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}