Last quarter was all about inflation – but we think it will moderate in 2023
- 08 mins 22 secs
James Goldstone, Fund Manager
Inflation remained the headliner in the final quarter of 2022.
While energy prices abated from late summer and weakened further on warm winter weather, they were still significantly above the levels that had persisted for years. Furthermore, food prices were, and still are, up sharply.
In response, the Bank of England raised interest rates twice during the quarter from 2.25% to 3.5%.
While inflation remains a concern looking into 2023, there is reason for optimism that it will moderate over the course of the year.
The UK equities market also looks attractive relative to other markets. Firstly, more than 75% of corporate earnings in the FTSE All Share Index are derived internationally, so the market offers exposure to a global opportunity set rather than to a narrow set of UK-only businesses. Secondly, our analysis shows UK equities to be cheap across a blend of valuation measures – both relative to their own history and, in particular, the US market.
In short, although there are currently challenges for markets, we believe there are opportunities to be found.
In his Q4 video update, James reflects on the quarter and answers the following questions:
00:21 - What has been happening in the UK equity market over the last quarter?
01:35 - How did the UK Equity Share Portfolio perform over the quarter?
04:30 - What changes have been made in the portfolio over the last quarter?
05:39 – What is the outlook for UK equities?
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Important informationAll information correct as at 18 January 2023 unless otherwise stated.
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