Governments and opposition parties will often flag their intended targets, having worked out which policies will garner the most votes.
FTA: What opportunities might investors see this year (and will they be influenced by electioneering)?
CM: In a world where market dynamics are constantly reshaped by geopolitical tensions, economic divergences, and national peculiarities, it's the central banks, with the Fed at the wheel, that continue to dictate market movements, not global elections.
Despite North America continuing to dominate the headlines, 2024 has been characterised by a geographically more broad-based rally, especially since January 22.
Notably invigorated by a revitalised Chinese economy, challenging the once stale narrative of its investability with newfound optimism.
One of the core reasons for our positive outlook on UK equities is the attractive valuation of many companies.
Compared to their global counterparts, UK stocks are, on average, trading at a discount, with their price/earnings ratio now close to 40 per cent lower than the rest of the world.
This undervaluation presents a unique opportunity for investors to gain exposure to high-quality companies with strong fundamentals, positive cash flows, and solid dividend yields at a lower entry point.
The value proposition is particularly compelling in the financial services, energy, and consumer goods sectors, where several companies stand out for their resilience and growth potential.
Overall, the domestic economic outlook is also looking somewhat better, and we believe after a fairly dismal couple of years, small and mid-cap stocks are best positioned to benefit.
Beneath headline-grabbing developments lies a nuanced story of shifting market paradigms: the convergence of growth and value sectors and the undercurrents of active versus passive management strategies.
This means that there are many opportunities out there for investors, but they are not in the same places as they were previously.
FTA: What's your general outlook for this year and how can investors and their advisers position themselves in the best way possible?
CM: We maintain a favourable outlook on markets and sectors that offer attractive valuations on a relative basis and contain companies that haven’t excessively capitalised on the artificial intelligence hype, or the retail investment frenzy.
While acknowledging the potential for further growth in certain AI-related stocks beyond the US, we have exposure via Europe, Asia, and Japan.
Our allocation strategy tilts underweight towards the US compared to our peers. However, within our US holdings, approximately 50 per cent is invested in value-oriented companies – a position we’ve upheld for the past two years.
