Diversity and defence: How to navigate UK markets

Following last year's spectacular market rally, market cap diversity and non-cyclical businesses will be key to achieving growth, explains James Henderson, manager of the Henderson UK Equity Income and Growth fund.

Equity indices around the world are experiencing bursts of volatility but well-run UK companies are making good returns and, in my view, have the capacity to grow and add significant value for shareholders. Management teams remain focused on generating cash, which should ultimately be returned to shareholders via dividend growth, special dividends, shareholder buybacks and selective earnings-enhancing acquisitions. Defensive positions Real diversity is key to reducing risk, so although the fund has a sizeable position in industrials, for example, holdings vary considerably. We own ...