The recent market volatility has caused many investors to reassess their convictions and take a closer look at where they are taking risk, given some areas of the market have been looking overcrowded for some time.
One area of the market we have been adding to over the past quarter is UK equities, which has long been an out of favour region. We believe there are compelling reasons why UK equities should outperform in the coming months.
Looking at the macro picture, the UK’s growth outlook is now improving after a slowdown last year. The UK recorded solid growth of 0.6% in Q2, following 0.7% in Q1, driven by strong consumer spending and services output.
Recent employment data has been surprisingly strong and consumer savings rates are increasing too, which should further support growth next year as consumer sentiment grows and savings get converted into spending.
Chart 1: UK economy improving over the…
