60 seconds with Matt Hudson on his favoured UK sectors

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.


Important Information: This communication is marketing material. The views and opinions contained herein are those of the author(s) on this page, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results. The value of an investment can go down as well as up and is not guaranteed. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Some information quoted was obtained from external sources we consider to be reliable. No responsibility can be accepted for errors of fact obtained from third parties, and this data may change with market conditions. This does not exclude any duty or liability that Schroders has to its customers under any regulatory system. Regions/ sectors shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. The opinions in this material include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change.  The content is issued by Schroder Investment Management Limited, 1 London Wall Place, London EC2Y 5AU. Registered No. 1893220 England. Authorised and regulated by the Financial Conduct Authority.

Contact Schroders Wealth Management

To discuss your wealth management requirements, or to find out more about our services and how we can help you, please contact:

Marc Brodard

Marc Brodard

Head of Private Clients - Switzerland