UK 2013: Schroders

Richard Buxton, Head of UK Equities at Schroders, looks ahead into 2013:

“We have already passed the low point for UK equities – below 3500 on FTSE100 twice in the last 12 years - and are in the foothills of a new bull market.”

“Over a decade ago I warned that equities were likely to go sideways for 10-15 years. Not because I anticipated all the headwinds to growth we now face, but because from a starting price-to-earnings (P/E) ratio above 20x, the stockmarket was always going to struggle. Moreover, the pattern of long-term returns from UK equities is made up of extended periods of strong gains and multi-year phases of going nowhere.

“By 1999 we had enjoyed a near 20-year period of double-digit per annum returns. No wonder equity funds were best-selling and pension funds allocated over 80% to equities. There was no talk then of ‘the death of equity’ or ‘the lost decade’. Fast forward to 2012 and the prevailing mood is gloomy. Outflows from equity funds are unrelenting and money continues to pour into bonds. For 12 years, equity investment has delivered lots of volatility and precious little return, which has led a scarred generation of investors to search for ‘safe havens’...”