Investment Strategies

Don't Ignore The Strength Of UK Firms, Says JP Morgan Asset Management

Wendy Spires, Group Deputy Editor, London, 28 September 2011

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Despite the continued market gyrations of recent times, investors need to bear in mind that market sentiment does not necessarily reflect the robust health of many UK large-caps and dividends remain strong in many cases, according to Sarah Emly of JP Morgan Asset Management.

Dividends have recently been high on investors’ radar as a means of generating income at a time when interest rates and bond yields remain low. Indeed, ironically scores of blue-chip corporates both in the UK and elsewhere are actually in far better financial shape than the countries in which they are listed. Particularly healthy are those firms which derive a large chunk of their income from the booming emerging markets.

Emly, who is portfolio manager of the JP Morgan Claverhouse Investment Trust and JP Morgan Income and Capital Trust, points out that despite the problematic economic conditions at present, there are a number of large-cap UK stocks offering yields of around 5 per cent, and many of these are defensive to boot.

“We think it is important that investors understand that current market sentiment is not necessarily reflective of the strength and resilience of many large UK companies,” she said.

“Although the economic environment is very challenging, we currently see UK equities as attractively valued potentially with a prospective dividend yield in excess of 4 per cent. In addition, around 70 per cent of their revenues are internationally sourced thus offering a window on global growth alongside having some of the strongest corporate governance standards in the world.”

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