Funds investing in the UK were some of the top performers in the first quarter of this year as Britain s fast roll-out of vaccines has tempted some investors to bet on the country s recovery.
The Investment Association s UK Smaller Companies sector came top of the table, with returns of 9 per cent in the first three months of the year, while UK Equity Income funds were in third position, up 6.8 per cent, and UK All Companies up 5.8 per cent.
North American smaller companies are also benefiting more than large caps from the expected economic recovery, with the average fund in that sector growing 6.9 per cent.
UK equity sectors had another strong month in March, as sterling rebounded and confidence in the UK returned to markets, while the reversal of fortunes for growth and value oriented strategies hurt Baillie Gifford funds. The UK Equity Income sector, last year s dog, came in second in terms of average performance, rising 4.81% - hot on the heels of the Global Equity Income sector s performance of 5.1%. The UK Smaller.
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If covid-19 cases keep falling, and buoyed by attractive valuations, the UK will look more investable
Despite a perceived weak economic outlook and the FTSE 100 suffering its worst year since 2007 with a 14% decline in 2020, the Liontrust multi asset team is increasing its weighting to UK equities.
As part of its strategy of favouring cheaper equity markets; including Europe, Japan and Asia/emerging markets, rather than the expensive US, Liontrust said it is now “increasingly comfortable” favouring the UK as well.
Having been neutral on UK equities for much of last year, growing vaccine optimism led the multi asset team to adopt an overweight stance in November, while it also upped its exposure to small caps as the end of the Brexit transition period approached.