Purves and Lance: Why equity valuations are misleading

Superficially attractive equity market valuations are concealing a number of warning signs for investors, according to RWC Partners' income managers Nick Purves and Ian Lance.

The duo, managers of RWC’s £150m Income Opportunities and £163m Enhanced Income funds, as well as the £1.1bn St James’s Place UK High Income fund, said markets are at a “difficult stage of the cycle”, characterised by full valuations and limited income opportunities. According to data compiled by the pair, just 70 of the 350 largest UK companies have a historic yield of above 4%. Only eight of the UK market’s 24 sectors have historic yields above this level, and these are often sectors containing a small numbers of companies. Sectors such as tobacco and healthcare are made up of just ...