UK stocks have widely outperformed global equities this year, in a sign that investors are hunting for bargains as they exit higher-growth businesses whose appeal has been tarnished by expectations of interest rate rises. A broad MSCI index tracking UK companies has added 3.6% in dollar terms since the end of 2021. That gain puts British stocks more than 9 percentage points ahead of the broader MSCI World index, which has fallen almost 6% over the same period. If current trends were to continue through to December, this would mark the first year since 2011 that UK equities have beaten the rest of the world, according to FactSet data. London’s blue-chip benchmark share index, the FTSE 100, has a heavy concentration of industries that have been unpopular investments over the past decade, such as global banks, miners and energy producers — from HSBC to oil major BP. At the same time, the gauge lacks technology companies to rival US heavyweights such as Alphabet, Amazon and Apple, and has trailed other leading equity indices in the years that followed the 2016 Brexit referendum. Last year, for example, Wall Street’s S&P 500 index gained 27%, while the FTSE 100 gauge added just 14%. But those trends have reversed in recent weeks as global investors have begun to unwind positions in riskier assets expected to grow at a rapid clip years into the future in favour of cheaper stocks represented in UK markets.

Past performance is not a reliable guide to the future. The value of investments and the income from them can go down as well as up. The value of tax reliefs depend upon individual circumstances and tax rules may change. The FCA does not regulate tax advice. This newsletter is provided strictly for general consideration only and is based on our understanding of law and HM Revenue & Customs practice as of February 2022 and the contents of the Finance Bill. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned in connection with the content hereof and any such action or inaction. Professional advice is necessary for every case.