Talking Point  

Advisers enter 2021 optimistic about outlook for UK equities

Advisers enter 2021 optimistic about outlook for UK equities

Advisers expect UK equities to perform better than most other equity markets in 2021, according to the latest FTAdviser poll.

The poll, which was conducted via Twitter, shows that over 60 per cent of advisers expect the domestic market to outperform this year, following years of underperformance.

A combination of the political uncertainty which led to there being three general elections within four years, the uncertainty of the Brexit process, and the fact that many of the largest companies listed on the UK market are in sectors that the market perceives would lose out in a world of low growth, and low inflation, as many of those companies are in sectors such as mining, banking or oil, which perform best when economic growth is picking up. 

Data from fund consultancy firm Square Mile Research indicates that the UK equity sector was the most viewed by users of its website in the final quarter of 2020. 

Jack Glover, chief operating officer for research and consulting at Square Mile said: “Q3 may have ended with some mild profit-taking in equity markets, but Q4 saw an extraordinary continuation of the rally that started in late March 2020.

"Global equity markets rose in mid-teen percentages and the UK equity markets were no different. It is perhaps unsurprising that after a poor Q3, advisers looked to the UK equity market for ideas in Q4. 

"That is not to say there was not an element of caution. The fact that the IA Mixed Investment 20 per cent-60 per cent shares sector was the second most viewed would suggest that advisers are seeking to build a buffer against any potential sell-offs. 

"It is interesting to note that while many market commentators believe that inflation is due to make a comeback in 2021, inflation protection was the least researched investment outcome. “

 david.thorpe@ft.com