Jupiter’s £3.2bn income trust manager Tony Nutt says takeovers by private equity firms and foreign companies are slashing the number of stocks on the market.
Nutt believes managers will have to sharpen their stockpicking skills to find value.
Last year, Nutt lost 14 stocks from his 100-stock portfolio and has lost more this year, including Corus, McCarthy & Stone, AB Ports and Gondola.
He says: “The hotter parts of private will eventually blow over and parts of the UK market will be decimated, leaving a harsher market of unattractive areas.”
But New Star £423m UK growth fund manager Stephen Whittaker says he does not look at the UK market as either value or growth but believes it is fairly valued and deep enough to keep throwing up plenty of opportunities.
He welcomes the wave of corporate activity and is delighted he has six stocks currently subject to approaches.
He says: “The UK market is a very deep market and it looks relatively attractive at the moment. If you cannot keep finding the opportunities you are not looking hard enough.”
“Fund managers should look at the market through the eyes of a venture capitalist or a private equity firm, in a free cashflow to yield basis. I currently have six stocks which are likely to be bought out.”