Fund managers are further cutting exposure to British equities, according to Bank of America Corp., as the country’s cheaper, so-called value shares lose favor along with banking stocks.
(Bloomberg) — Fund managers are further cutting exposure to British equities, according to Bank of America Corp., as the country’s cheaper, so-called value shares lose favor along with banking stocks.
A net 21% of global investors say they are underweight UK equities, up from 6% last month, according to the bank’s latest global fund manager survey. That compares with European shares where a net 1% are overweight. Still, the UK fares better than the US, where 34% of investors are underweight.
The UK FTSE 100 avoided a global stocks selloff last year, partly thanks to its heavy weighting of value stocks that tend to outperform growth equities when interest rates rise. However, as investors eye a potential peak in central bank rates, the preference for value has subsided.
A net 15% of European investors think value will underperform growth in the coming months, BofA’s regional survey showed. Technology, on which the UK market is relatively light, remains the most popular sector overweight in Europe after regaining top spot last month for the first time in a year.
Banks, meanwhile, are seeing “capitulation,” with the sector slipping to an underweight position, BofA added.
–With assistance from Michael Msika.
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