Quarterly Review Q1 2024 - Growth Final - Flipbook - Page 7
Pension funds and UK equity investments
More pivotal will be government efforts to encourage UK pension funds to raise their investment in
domestic companies. Unlike two decades ago, when it was common for UK pension funds to allocate a
signi昀椀cant portion of their assets to local companies, this 昀椀gure has drastically declined to a low single
digit percentage. This contrasts with pension funds in countries like Australia, France, Japan, and Italy,
which allocate a substantial portion of their assets to their domestic equity market. In this regard, it was
notable that the government also announced a new requirement for UK pension funds to disclose their
allocation to UK companies going forward, suggesting that further action could be taken if allocations
are not increasing.
Corporate UK’s response to market conditions
Amidst these developments, with the UK equity market still trading at extremely cheap valuations, we
see corporations taking matters into their own hands with a stream of announcements characterised by
aggressive share buybacks (companies using their pro昀椀ts to buy their own undervalued shares, thereby
increasing Earnings (pro昀椀t) Per Share for the remaining shareholders), higher dividend payouts and a
surge in acquisitions by both domestic and international suitors. We are encouraged to see an increasing
number of routes that this value in UK equities could get realised going forward.
Global elections and market impact
As the 2024 US presidential election primaries heat up, alongside elections in the UK, India, and other
countries, global investors are monitoring potential market impacts. However, historical trends suggest
that the election outcomes, regardless of the political spectrum, will have limited long-term effects on
market behaviour. Our priority remains to provide you with a diversi昀椀ed portfolio across various asset
classes, managers, and investment styles to harness the best long-term global investment opportunities.
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