Fund managers bullish about the UK stock market

5th January 2011

It may not be a stampede yet, but most firms quoted see a range between 6,400 and the magical 7,000 figure.

The Guardian also poses the 7,000 point question, noting that this represents an all time high not seen since the dot com boom beating the 6930 last reached on 30 December 1999.

A annual poll by the Association of Investment Companies has 92 per cent of investment trust fund managers predicting that the UK stock market will rise this year, reported here in the Observer.

This compares to the 74 per cent of trust managers who, twelve months ago, believed the market would rise in 2010. That majority view proved correct as the FTSE rose by some 9 per cent last year, even breaking the 6,000 barrier in late December and once again on the first day of trading this year, before falling back.

Fund houses are adjusting their portfolios accordingly. A Reuters survey, reported here on Yahoo Finance  agrees.

It shows small but significant increases in equity market exposure, in the US, Europe, Japan and the UK. The 12 UK fund managers surveyed saw the average UK allocation to global equities climb to 54.2 per cent from 52.8 per cent. 

In the US, the big names have lined up with the bulls too. The list includes Goldman Sachs, JP Morgan, Bank of America Merrill Lynch and Morgan Stanley, neatly summarised here by the Chicago Tribune .

In the UK Schroders have been bullish since November as MindfulMoney reported.

And yet the message boards are more cautious.

Accompanying the Telegraph's report, Checkmate wants to know why no one is considering the market falling to 5,000.  

He says: "It's notable that only one of those asked even mentioned 5000! The market invariably fools the majority. There's a very good reason for this based upon mean reversion and human behaviour. As for the rest of the spiel let's make it clear as so many people appear to have forgotten. This market recovery is first and foremost about the ability and willingness of the US Fed and the other significant central banks to create liquidity. This in turn requires the compliance of the bond markets and the latter coming into the latter stages of last year looks less and less forthcoming."

Not all commenters are as cynical about the scope for returns.

Crydda says: The UK stock market lists companies from all over the world and so, nowadays, is increasingly less dependent on the performance of British based companies.It's a fact that many of these organisations are doing quite well, thank you; even if that doesn't cheer us up much, as Britain slides inexorably deeper into the economic mire. Funny old world, isn't it?"

3 thoughts on “Fund managers bullish about the UK stock market”

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    The “rescue packages” as a whole were badly conceived so of course you were correct in many ways!

    Your article appears to end mid sentence…..

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