While the UK has been falling out of favour for some time, events this week have underlined that stance.
Prudential’s behemoth Portfolio Management Group £71.5bn PruFund is at its lowest-ever UK equity weighting and at Wellian Investment Solutions, the writing has been on the wall for UK stocks for some time.
Chris Mayo, investment director at Wellian explains that the team started reducing its UK equity allocation around a year ago – even before Brexit, never mind the looming threat of another Scottish Independence referendum and the recent shock announcements coming out of Ms May’s cabinet.
Yet Mayo cites the need for greater diversification as a key driver, rather than the political instability weighing on decisions.
“We have been moving things to a more global, more diversified place in terms of asset classes,” he says.
“All the events of last year saw ‘uncertainty’ keep cropping up and the events of the last 24 hours have – from a UK plc perspective and also an investment management perspective – just added even more uncertainty to what is going on.
“But I think politically it makes sense for her, in order to get a sense which of the major parties are truly behind Brexit or not.”
Husselbee adds: “Nothing today has materially altered the trend in economic growth or inflation and we won’t be rushing to change direction in our portfolios.
“If anything, with the polls suggesting the Conservatives will retain a majority, then perhaps we should expect a smoother ride in the Brexit negotiations.”
Mayo tells how at the end of 2015 Wellian’s balanced portfolio had around a 38% UK equities exposure, whereas today it stands at around 15%.
Meanwhile Prudential PMG is currently showing its lowest-ever UK equity weighting, of around 16%.
