Time to take profits on UK domestic stocks?

Neil Veitch is rotating his SVM UK Opportunities fund from domestic to international stocks, in the view optimism around the UK recovery has peaked and left sterling looking vulnerable versus the US dollar.

The manager said domestic stocks, such as housebuilders, had a strong year in 2013 on the back of the UK economic recovery and a lack of foreign exchange risk. In turn this trend has impacted negatively on sectors as industrials, pharmaceuticals and tobacco, leaving them looking attractive. “We still think UK growth will pick up, but find ourselves more conservative than the forecasts,” he said. “Growth optimism has peaked, so a number of domestic-facing stocks look expensive, and we have been reducing our exposure. “In the medium term, sterling may well depreciate against the [...