Watch/Listen

60 seconds with Matt Hudson on his favoured UK sectors


Matt Hudson

Matt Hudson

Head of Business Cycle Equity Team

See all articles

A tough year

UK investors have had to deal with a lot this year, not only a slowing global economy but the fallout from the vote to leave the European Union.

In a period of uncertainty, investors are focused on those assets they feel add security, high yield and they’ve sought out companies with exposure to overseas currencies.

But we think there’s a more interesting outlook.

Financials favoured

We are moving into an environment where inflation is going to pick up and it will be a more fiscally expansive period.

That premium of safety investors have been craving in defensive1 assets is going to be challenged by a more reflationary and inflationary environment.

In that context, the type of assets we think are interesting are financials, some commodity cyclicals and, broadly speaking, value areas of the market.

These are stocks that haven’t yet delivered but in an environment where nominal growth is picking up, earnings can grow.

With the market yields just under 4% yield, we think it is an attractive time to be investing in UK equities.


1. Defensive Assets: more conservative, lower risk investments which generally earn returns from interest but offer lower long-term returns.

 

The views and opinions contained herein are those of the Authors, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds.

 

This document is intended to be for information purposes only. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions.

 

Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get back the amount originally invested.

 

Schroders has expressed its own views in this document and these may change (to be used if the 1st statement above is not being used).

 

Schroders will be a data controller in respect of your personal data. For information on how Schroders might process your personal data, please view our Privacy Policy available at www.schroders.com/en/privacy-policy or on request should you not have access to this webpage.

 

Issued by Schroder Investment Management (Europe) S.A., 5, rue Höhenhof, L-1736 Senningerberg, Luxembourg. Registered No. B 37.799. For your security, communications may be taped or monitored

 

The forecasts stated in the document are the result of statistical modelling, based on a number of assumptions. Forecasts are subject to a high level of uncertainty regarding future economic and market factors that may affect actual future performance. The forecasts are provided to you for information purposes as at today’s date. Our assumptions may change materially with changes in underlying assumptions that may occur, among other things, as economic and market conditions change. We assume no obligation to provide you with updates or changes to this data as assumptions, economic and market conditions, models or other matters change.