While UK equities have generated positive returns since the pandemic, fund flows have generally remained negative. Alex Wright, portfolio manager of Fidelity Special Situations and Fidelity Special Values PLC believes many domestic investors seem to have had their heads turned by US and technology stocks, whose lofty valuations make them very vulnerable to disappointments.
“Despite their improved performance over recent years, UK equities still look cheap relative to other markets, and reasonable on an absolute basis. We believe that the combination of attractive valuations and the large divergence in performance between different parts of the market create good opportunities for attractive returns from UK stocks on a three-to-five-year view.
“Although the UK market continues to remain largely unloved by domestic investors, its attractive valuations are being recognised by other market participants such as overseas…
