Talking Point: Where now for UK equities?

'Invest in what you know': this is a well-known totem which has served many investors well for many decades.

But if what you know is only a handful of domestic equities, and this occupies the lion's share of your portfolio: are you really playing it safe, or taking a big risk?

Investors seeking to plough everything into the domestic market - in this case, UK equities - could be considered to be following a risky strategy.

After all, they are putting themselves in a position of overly high exposure to their home economy: their job, their income, their house, their bank account, their mortgage and their pension are all likely to be in the UK and valued in sterling.

Why, then, would UK equities make up the majority of an investment portfolio, when there is a whole world of stocks and shares from which to choose?

Then again, given that UK economic growth figures have been depressed significantly, thanks in part to Covid-19 and in part to Brexit, how can investors make sense of which UK stocks might be a good long-term investment choice, and which ones will not stay the course?

Choice comes down to it: most investors do not have the time to pick stocks or even choose fund managers, so how can they make the right decisions about whether to stay or leave the UK?

And if they do sell, are they merely crystallising their losses and potentially missing out on an eventual rebound?

This is why getting good investment advice is so important: when the FTSE 100 has fallen from its giddy heights of 7,600 and more at the start of 2020, down to trading around 5,800 as at the end of October, what should investors know and what decisions should they be making?

Providing a well-diversified investment portfolio for a client does not mean ditching the UK altogether - but it does mean being selective about the funds and stocks within a portfolio and finding those diamonds sparkling among the London Stock Exchange listings.

Analysts who scour the markets daily will tell you there are great UK investment opportunities to be found despite the gloomy headlines and the prospects of strong economic headwinds.

This report aims to highlight some of those bright spots in the UK market and showcase what sort of investment strategies will work well for an equity market that appears to be very much unloved at the moment. 

It also qualifies for an estimated 30 minutes' worth of CPD. 

simoney.kyriakou@ft.com