“We have never subscribed to the UK is doomed following the Brexit vote and despite the negotiation process appearing to be rather chaotic, as ever negative sentiment can create opportunities for the best active managers,” Metcalfe said.
“In our opinion, some allocators may be blindsided by political prejudices and we try our best to remain objective on such issues. The benefits of our own currency and interest rate policy cannot be overestimated. On any significant fall in the mid and small cap indices we would expect to increase our exposure.”
Ryan Hughes, head of fund selection at AJ Bell Investments, said the persistent barrage of negative headlines about the danger of Brexit continues to hold back investor sentiment in UK equities and that is reflected in its current outlook.
“The likelihood is that certainly in the short-term, growth will be lower and this combined with a persistently high level of personal and government debt creates a headwind should the global economy fall into recession,” Hughes said.
“However the UK stock market is a strange beast given its international focus and concentrated sector biases, so it is entirely possible that certainly in large caps, the market may perform differently to the UK economy.
“Our longer term outlook however is that UK equity performance is likely to lag other markets and as a result, our long term asset allocation indicates a lower weighting towards UK equities than some might expect. We currently have about 12% allocated to UK equities in our Balanced Fund.”
For its part, Nick Dixon, investment director at Aegon, said that it remains overweight in the UK in its Core and Select Portfolios, which are managed in conjunction with Morningstar.
“While many developed asset classes look overvalued at present, UK equities feel better value on a relative basis,” said Dixon. “Market fundamentals remain broadly unchanged following the vote to leave the EU, despite speculative activity and the recent fall in sterling.
“For those that can invest in the medium to long-term the UK market remains attractive, as any short-term uncertainty caused by the nature of future trade deals with the European Union will only partially impact large cap companies, who are more likely to trade internationally.”
