Threadneedle's Brazier: UK equities have rarely been this cheap

Concerns that UK equity valuations look overstretched are misplaced, according to Threadneedle head of UK equities Simon Brazier.

Given the recent rally in UK equities, investors may harbour concerns that valuations have become overstretched. However, on a P/E ratio of approximately 11x, the UK is one of the cheapest developed markets. Indeed, with the exception of Q1 2009, the UK has not been this cheap since 1994. Furthermore, in a low-growth environment, income is an important component of total returns, and with a forecast dividend yield in excess of 4% for 2013 the UK is one of the highest yielding markets globally. Crucially, the UK now offers better quality earnings with companies having strengthened thei...