From Morningstar: 2024-09-16 07:49:00

1. Christopher Johnson believes it’s time for investors to take another look at the U.K. equity market due to recent market sell-offs in the U.S., a new government in the U.K., and potential thawing of relations with the EU. Guy Anderson of J.P. Morgan Asset Management shares optimism for a potential market recovery.

2. Anderson highlights the improving economic outlook in the U.K., with factors like real wage growth, promising soft lead indicators, and potential political stability leading to a re-rating of the market. The U.K. equity market is currently undervalued compared to historical levels and other equity markets, presenting an interesting investment opportunity.

3. With turbulence in the U.S. markets, Anderson suggests that investors may consider looking at the U.K. equity market as an alternative option due to the reluctance to part with performing investments. Brexit uncertainty has led to re-rating of U.K. equities, but with improving economic outlook and potential political stability, valuation could return to pre-Brexit levels over time.

4. The JPMorgan UK Equity Growth Fund has outperformed the Morningstar UK Index year-to-date, achieving 11.53% returns. Anderson attributes the fund’s success to bottom-up stock selection, with companies like Rolls-Royce showing positive operational momentum and delivering financial improvements exceeding market expectations.

5. Despite Shell and BP being top holdings, Anderson explains that their growth potential is based on expectations surpassing the market. Energy companies such as Shell and BP were added to the portfolio in early 2022 due to the increase in oil and gas prices following Russia’s invasion of Ukraine. The outlook for these companies is currently more challenging.



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