Surveys
UK Investors Raise Small-Cap Equity Exposure – Janus Henderson

London-headquartered asset manager Janus Henderson has just launched its "Portfolio Panorama" report, analysing allocation trends across 1,229 UK portfolios from March 2024 to February 2025.
A new report by Janus Henderson shows that UK investors have increased their exposure to small-cap equities, whilst reducing their exposure to US stocks and keeping European allocations steady.
Despite overall strong performance of US markets, UK investors are responding to recent volatility by seeking out opportunities closer to home, the report reveals.
UK investors remain significantly overweight in domestic equities compared with global equity market caps, with technology continuing to lead sector preferences, followed by financials and industrials.
Paris-based asset manager Carmignac has also been re-engaging with Europe and is slightly overweight in European equities. “European stocks are cheap. US firms are exceptional but so are valuations. There are opportunities in European assets which can act as a great diversifier. We favour sectors in Europe that are not exposed to the economy, such as the aerospace industry and luxury goods,” Kevin Thozet at Carmignac said.
"While large-cap stocks still represent the majority of equity holdings, their share has dipped from 70 per cent to 68 per cent over the previous and current periods, with allocations to small and mid-cap stocks increasing. Small-cap exposure rose from 8 per cent to 9 per cent, while mid-caps increased from 22 per cent to 23 per cent, signalling a potential comeback," Janus Henderson continued.
The Portfolio Panorama report focuses on aggregated data
from UK portfolios over two distinct six-month intervals: the
previous period (March to August 2024) and the current
period (September 2024 to February 2025). The
report analyses allocation trends across 1,229 UK
portfolios.
As readers know, US markets have slipped in recent
weeks amid worries about US President Donald Trump's tariff
policy towards Canada, China, Mexico and the European
Union.
Fixed income
Against a backdrop of stickier inflation, uncertainty
over US President Donald Trump’s policies, the Autumn
budget, and lower UK growth expectations, investors have kept
their allocation in defensive strategies with a focus on
high-quality fixed income, the survey shows.
Allocation to high-quality fixed income remained stable, highlighting continued uncertainty on the short- and medium-term economic outlook. However, a small increase in average UK portfolio duration – from 3.2 to 3.3 years over the previous and current periods – indicates growing confidence that inflationary pressures will continue to recede.
The proportion allocated to defensive strategies rose slightly from 61 per cent to 63 per cent over the previous and current periods, while exposure to diversifying assets, including flexible bond funds, declined.
Within fixed income, investors maintained a strong focus on defensive assets, with allocations to government and corporate bonds remaining steady at 39 per cent and 31 per cent each. This reflects a preference for stability amid ongoing macroeconomic uncertainty, as investors position themselves for potential central bank rate cuts.
Alternatives and Implementation
Amidst a sustained equity bull run in 2023 and 2024, clients have
scaled back on liquid alternative investments, while passive
strategies have remained dominant. The average portfolio
allocation to passive or index funds experienced a slight dip
from 44 per cent to 43 per cent over the previous and current
periods.
Exposure to long-short equity strategies more than halved, contributing to a modest decline in overall alternative allocations from 3.4 per cent to 3.3 per cent over the previous and current periods. This reduction in hedging strategies reflects an increasing appetite for risk, as investors position themselves for continued market strength, the firm said. Portfolio expense ratios rose marginally from 40 to 42 basis points over the previous and current periods, reflecting subtle shifts in implementation costs.
“The findings from our inaugural Portfolio Panorama report highlight the careful approach UK investors are taking in today’s market environment. The increased focus on small-cap equities suggests a search for new growth opportunities, while strong allocations to fixed income reflect a continued emphasis on stability,” Matthew Bullock, head of portfolio construction and strategy, EMEA & APAC, at Janus Henderson, said. “It will be interesting to see how investors act over the next few months and whether the decline in appetite for long-short equity strategies is continuous or a short-term trend. As global market dynamics evolve, understanding these portfolio shifts will be key for long-term investors.”
Headquartered in London, Janus Henderson has about $379 billion in assets under management, more than 2,000 employees, and offices in 25 cities worldwide. It is listed on the New York Stock Exchange.