A fresh start for UK stocks?
Laura Foll, Co-Portfolio Manager of Lowland Investment Company, talks about the performance of the UK market, how companies are dealing with rising costs, and how the Trust performs in this type of environment. Laura also provides her outlook for dividends in the coming months.
- The UK stock market has performed well to begin the year, mainly benefitting from its sector make-up. Natural resource companies have benefitted from higher commodity prices, whilst financials have benefitted from the prospect of higher interest rates.
- Companies are likely to experience margin pressure in 2022 due to rising input costs, such as higher labour, energy, and raw material costs. However, companies with strong pricing power have been able to pass on these costs to consumers.
- Dividends have recovered strongly so far this year, with special dividend payouts from mining companies like Anglo American and Rio Tinto. Share buy-backs have also increased in the UK market.
Please read the following important information regarding funds related to this article.
- If a Company's portfolio is concentrated towards a particular country or geographical region, the investment carries greater risk than a portfolio that is diversified across more countries.
- Some of the investments in this portfolio are in smaller company shares. They may be more difficult to buy and sell, and their share prices may fluctuate more than those of larger companies.
- This Company is suitable to be used as one component of several within a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested in this Company.
- Active management techniques that have worked well in normal market conditions could prove ineffective or negative for performance at other times.
- The Company could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the Company.
- Shares can lose value rapidly, and typically involve higher risks than bonds or money market instruments. The value of your investment may fall as a result.
- The return on your investment is directly related to the prevailing market price of the Company's shares, which will trade at a varying discount (or premium) relative to the value of the underlying assets of the Company. As a result, losses (or gains) may be higher or lower than those of the Company's assets.
- The Company may use gearing (borrowing to invest) as part of its investment strategy. If the Company utilises its ability to gear, the profits and losses incurred by the Company can be greater than those of a Company that does not use gearing.