View more on these topics

Another year

2011 could be more of the same in the markets but there will be opportunities for investors

Following a turbulent 2010, I am reviewing my equity investments. What is the outlook for 2011 for UK equities?

In the UK, next year is not going to be dissimilar in many ways to this year in terms of the economic backdrop.

We are going to continue to see weak economic growth and while inflation will probably remain above the Bank of England’s target of 2 per cent it is still going to be on the low end at around 3 to 4 per cent and we will see one or two more open letters from the governor of the Bank of England, it is nothing to be too concerned about.

There is a lot from outside the UK that will affect the UK.

What we will probably see is that concerns over European debt will continue into the new year, it may disappear only to re-emerge later in the year and that will act as a potential trigger for markets.

As we are looking at low growth, there is a concern that many countries will slide back into recession. A large amount will depend on the US – as the saying goes, America sneezes and the rest of the world catches a cold. It still dominates world economies and its impact is much bigger than other countries.

Within the UK, unemploy-ment will remain reasonably high.

In terms of opportunities, because there is low economic growth and there are headwinds that could knock that off track, although there are some predictions that growth could be higher than expected, so you will probably have markets trade in a range.

We might see that range move up slightly as positive news comes out, but then we might see it do exactly what it did this year when the market came off heavily in the summer.

So very much more of the same but there will be oppor-tunities for investors. We are very much looking at stockpickers. You will possibly see large-cap companies benefit as there will be growth, just as certain companies will have growth, certain countries will do well, so large brands will probably do well.

Whenever you are looking at funds, good stockpickers in the small-cap arena always have the potential to outperform, as that is where growth is supposed to come from. Good companies can benefit from that.

I think equity income is a relatively good area for investment. Having underperformed in 2009 and 2010, it still has not delivered what everybody was expecting but I think that will change. Whether that will change in 2011 is hard to see but investors are getting good yields there, so they will continue to be a good long-term investment strategy. You are buying good companies with stable cashflow and if the worst-case scenario comes around and we do go back into recession, you have good stable companies generating a yield that will provide a defensive element for investors while reinvestment of dividends over time is a strong argument.

Adrian Lowcock is senior investment adviser at Bestinvest


FSA ban for market abuse

The FSA has banned stockbroker Graham Betton for market abuse over his role in a scheme designed to ramp up a share price. Betton, a director of agency-only stockbroker SP Bell, will be fined but the amount is yet to be decided by the Upper Tribunal. In 2003, Eagle bought 85 per cent of Fundamental-E […]

Aifa fears advisers being used as blank cheque for education

Aifa is concerned that advisers will be viewed as a blank cheque to bankroll the Government’s plans for a national financial advice service. Speaking at the Pave the Way round table, Aifa policy director Andrew Strange said although financial capability is very important, he is worried about advisers being forced to meet the potentially escalating […]

FSA secures winding-up order against two unauthorised firms

The FSA has secured High Court winding-up orders against two unauthorised firms for operating a bio-fuels collective investment scheme. Bio Partners Limited and  Zambia Alpha One LLP both operated a collective investment scheme which invested funds in the farming of a bio-fuel crop in Africa, despite neither having FSA authorisation to do so. The regulator […]


ABI’s decision to keep TPD banner is a missed opportunity

I have heard that total permanent disability in critical-illness policies is under review. What does this term mean and what difference will it make to me as a policyholder? Total permanent disability describes a situation where, through injury or illness, a person is left unable to do their own or any occupation they are suited […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm