OMGI's Message: Sterling will become a tailwind in 2015

Managers have been grappling with the strong pound this year, as UK companies with overseas earnings have been hindered by currency strength. But that headwind will turn in to a tailwind in 2015, OMGI's Stephen Message predicts.

The underlying rate of dividend growth for the UK equity market has slowed this year, and the most recent report from Capita Asset Services' UK Dividend Monitor suggests underling growth is now broadly flat. However, the top 20 income payers represent roughly two-thirds of the market's income, and, on top of this, a number of these large dividend payers report their earnings in dollars. The strength of sterling, which rose during the first half of 2014 to reach a high of £1/$1.71 in September, has hampered reported dividend growth. The weakening of the currency since the summer, which...