When Nick Train recently said the UK was a ‘backwater’ of global markets, he was merely expressing a long-held belief among investors.
The star fund manager, who has previously argued British company shares have untapped value to offer, was reflecting how deeply unfashionable they have become.
All is not lost, though. The UK market’s period of underperformance occurred in an ultra low-rate environment in which central banks kept rates near zero. As they respond to higher inflation, an era of higher rates may well benefit the more income-focused UK market.
Gervais Williams, manager of the Diverse Income Trust, thinks Train is ‘100 per cent wrong’, and the UK’s underperformance can be explained by demand for fast-growing stocks.
Diverse Income Trust plc (LON:DIVI) invests primarily in quoted or traded UK companies with a wide range of market capitalisations, but a long-term bias toward small and mid-cap equities. The trust may also invest in large cap companies, including FTSE 100 Index constituents, where it is believed that this may increase shareholder value.