Looking back at the UK: Domestic acceleration

UK Equities

As global recovery spreads, Daniel Nickols, manager, Old Mutual UK Smaller Companies fund, asks if more investors should start moving down the company size spectrum and turning to domestic plays.

The sustainability of global economic growth is looking increasingly assured, UK equity valuations remain undemanding and risk appetite is – justifiably, in my view - improving. That is not to say that we are in some sort of investment Nirvana. Markets have performed strongly over the last couple of years, but virtually all of that appreciation has been driven by re-rating rather than earnings growth. We now need to see an acceleration in earnings growth come through in order to drive the UK equity market upwards. The conditions are in place to support this, and we are introducing mo...