Are UK equities in a ‘sweet spot’?

Are UK equities in a ‘sweet spot’?

Following a drawn-out period of stagnation, UK business and economic activity looks like it’s picking up again – and with it, investor interest in UK equities. We believe the UK market is currently enjoying a sweet spot, and here’s why…
 

  • Britain has left the European Union. The end of the prolonged Brexit deadlock suggests that the market, businesses – and investors – are back on firmer ground, armed with a greater level of clarity regarding the road ahead
  • The UK Government has a clear mandate to get the economy going. The more transparent post-Brexit, low interest rate environment means there is huge potential for businesses, which have been sitting on cash, to start spending and investing again
  • Economic data is already highlighting a significant pick-up in economic activity with January’s flash Composite Purchasing Managers’ Index (PMI) reaching a 16-month high[1]
  • The UK market boasts attractive valuations – in fact headline valuations, versus the rest of the world are at 30-year lows, offering investors the opportunity to invest in established UK-listed brands at attractive prices [2]
  • Investors can see this value too – in fact the UK was the best-selling equity fund region in December 2019, according to The Investment Association

 

At AXA IM, our fund managers have almost unfettered access to corporate management teams, allowing them to clearly analyse individual company fundamentals and what drives them. When it comes to selecting portfolio holdings, our core focus is on three areas – top-down and bottom-up analysis – and valuations.

We are small and mid-cap specialist stock pickers – this is how we add value, and our numbers speak for themselves…

AXA Framlington UK Mid Cap Fund – A robust track record [3]:

  • In seven of the past eight years, the AXA Framlington UK Mid Cap Fund has outperformed the FTSE 250 (ex. IT) index – and 88% of this outperformance is down to stock picking
  • Since launch in 2011, the Fund has delivered a benchmark-beating[4] annualised return of 13.5%
     

Past performance has been calculated in Sterling and is expressed as a percentage change of the Fund's Net Asset Value at each year end. Past performance is shown after the deduction of ongoing charges. Any entry/exit fees are excluded from the calculation.
The Fund was launched on 04/03/2011 and the unit in 2011.
Past performance is not a guide to current or future performance.

 

 

[1] IHS/Markit January 2020
[2] Source: MSCI, IBES Morgan Stanley Research as at 28 January 2020
[3] Performance data source: Lipper/FactSet as at 31 December 2019


[4] Prior to 07/08/2019 the comparator benchmark of the Fund was the 100% FTSE 250 Ex Inv Co Total Return Gross (FTPTT25X).

As of 07/08/2019, the comparator benchmark of the fund is the FTSE 250 Ex Investment Companies index.

Investments involve risks, including loss of capital.

 

Liquidity Risk: some investments may trade infrequently and in small volumes. As a result the Fund  manager may not be able to sell at a preferred time or volume or at a price close to the last quoted valuation. The Fund manager may be forced to sell a number of such investments as a result of a large redemption of units in the Fund. Depending on market conditions, this could lead to a significant drop in the Fund's value and in extreme circumstances lead the Fund to be unable to meet its redemptions. Further explanation of the risks associated with an investment in this Fund can be found in the prospectus.

 

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It has been established on the basis of data, projections, forecasts, anticipations and hypothesis which are subjective. Its analysis and conclusions are the expression of an opinion, based on available data at a specific date.

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Past performance is not a guide to current or future performance, and any performance or return data displayed does not take into account commissions and costs incurred when issuing or redeeming units. References to league tables and awards are not an indicator of future performance or places in league tables or awards and should not be construed as an endorsement of any AXA IM company or their products or services. Please refer to the websites of the sponsors/issuers for information regarding the criteria on which the awards/ratings are based. The value of investments, and the income from them, can fall as well as rise and investors may not get back the amount originally invested. Exchange-rate fluctuations may also affect the value of their investment.  Due to this and the initial charge that is usually made, an investment is not usually suitable as a short term holding.

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