Allocating to UK equities in a low yield environment

Investors must avoid 'yield weighting' portfolios

Just one year ago, the US 10-Year Treasury yield was 2.85% and the German 10-Year bund yield was 38 basis points.

Now, these figures have shifted to 1.51% and -0.68% respectively. While in the short term this signals significant risk aversion among investors, the more important question becomes: what will investors requiring income from their portfolios do in the meantime? UK equities among highest developed market dividend yielders UK equities currently represent the highest dividend yield opportunity across developed equity markets, coming in at 5.25%. This tells us two important things about UK equity investors: Firstly, those inside the UK have become accustomed to very high dividend yie...