“I think large-cap equities have the potential to be fine with the tailwind of the currency. But, as we look towards mid- and small cap, there is certainly the potential that it is a more challenged outlook as we go through 2017 and into 2018.
“But, actually, we have got quite a decent economic picture today, with low unemployment and decent PMI numbers. It looks like the foundations are there but I think we still have a few bumps in the road that we will need to get through to see where we end up at the end of the year.”
Also in the bullish camp is Iboss co-founder Chris Metcalf. “There is definitely a camp of investors talking down the UK but if you look at the level of the stock market, the UK does not look particularly expensive and we have control over both our currency and our interest rates,” he says.
“There is always a chance that we can shoot ourselves in the foot but the underlying data in the UK looks good.”
Metcalf also notes the currency situation has to be carefully assessed when considering your options.
“With the dollar rising against virtually every world currency, principally on the back of potential interest rate hikes, it is difficult to work out what dollar strength is and what sterling weakness is.
“Since over 70% of UK earnings come from overseas, this sterling weakness was the best news possible for the UK stock market. As the pound remains weak against a super-strength dollar, this positive tailwind could well continue.
“On top of that, the UK economy is proving resilient to the Brexit effects so far.
“The way our funds are set up for the year remains fundamentally the same but with probably the largest level of diversification in more than eight years.”
