Are UK equities a better bet than Europe?

EUROPE

With UK markets having underperformed many European indices in recent months, and the prospect of interest rates rising very soon, Raj Tanna, portfolio manager at J.P. Morgan Private Bank, analyses the future for UK equities.

The UK market has lagged core European markets over the last 24 months. During this period, the FTSE All Share index has underperformed the best performing Euroland index, Spain’s IBEX 35, by close to 50%. A lot of attention has been placed on the recovery in Spain and across other parts of Europe which, while important given quite how weak economic performance was 18 months ago, does not quite justify the outperformance of continental Europe versus the UK. This is because the economic performance of the UK has been equally impressive, but importantly also off a higher base. At points...