In August, the UK equity market produced a total return of 2.7%, as measured by the FTSE All Share Index. Medium-sized companies, which tend to be more sensitive to economic growth, outperformed with a total return of 5.7%, as measured by the FTSE 250 Mid Index, compared with a total return of 2.1% for the FTSE 100 Index of the largest companies.1

In general, companies announced good half-year results reflecting the recovery of the UK and overseas economies from the pandemic lows as sectors and activities reopened. Mining companies have benefited from higher-than-expected commodity prices caused by strong demand from China. There were big dividend increases from Rio Tinto, BHP and Anglo American, where City of London has shareholdings.

A complete sale was made from the portfolio of the relatively small holding in Hammerson, the owner of shopping centres in the UK, France and Ireland. The outlook for shopping centres remains difficult due to the growth in internet shopping and Hammerson’s indebtedness is relatively high.

Economic growth should continue to be strong given the scale of monetary and fiscal stimulus. With inflation rising, central banks could start to reduce quantitative easing, which would test markets. The dividend yield on UK equities remains attractive relative to the main alternatives.


1 Source: FTSE Russell as at 31 August 2021


References made to individual securities should not constitute or form part of any offer or solicitation to issue, sell, subscribe or purchase the security. Janus Henderson Investors, one of its affiliated advisors, or its employees, may have a position mentioned in the securities mentioned in the report.