Income managers rotate out of market leaders on bubble fears

UK equity income managers are selling out of defensive stocks which have led the global equity rally year-to-date, warning they are approaching bubble territory.

While markets have shot ahead since the start of the year – the FTSE 100 was up around 16% prior to last week’s set-back – a number of sectors and stocks have powered higher. Mega caps UK investors have continued to focus on mega caps, which traditionally offer some of the highest yields, but managers are now cautious on their prospects, arguing they do not offer good value at current levels. Kevin Murphy, co-manager of the £1.3bn Schroder Income fund, said there is high demand for stocks with a more certain profit outlook, such as tobacco and food and beverages, because of uncertai...