UK equities have been unfashionable for the best part of a decade. Valuations suffered as a result of the Brexit referendum in 2016. Since then, limp economic growth and a preference for the tech-heavy US market have compounded the problem.
The domestic market has also suffered as private investors have diversified away from UK equities to adopt a more global approach. Just 4.4% of UK pension assets are now held in domestic equities, according to think tank New Financial. This is a historic low. The global average is 10.1%.
The silver lining of this particular cloud is that it has created valuation discounts for bargain-hunting investors. Those who are patient enough to wait for a rerating could potentially reap meaningful rewards.
