TAM Bites: Outperforming ARC, Investment Opportunity, and UK Equities

Outperforming ARC
Our entire range of Active and Enhanced Passive portfolios have outperformed their respective ARC GBP benchmarks over 1 year, 3 years and 5 years. As well as 1, 3, and 6 months to Q1 end. The ARC indices’ portfolios are an amalgamation of 350,000 underlying portfolios from over 120 UK wealth managers. The performance of the cohort is grouped and the average of which has provided an invaluable insight into the performance of the broad wealth management industry, over a full spectrum of risk profiles. 
Source: FE Analytics. For more information and access to the ARC indices: www.suggestus.com

Investment Opportunity
Performance is key, this much is obvious to both client and manager. What is also obvious is that passive investing has done very well over time, and seemingly excellently when active management has struggled to gain traction like 2023. To our mind, the last two quarters (6 months) have seen a resurgence of active management in client portfolios, with performance finally starting to show some signs of life for which the active investment industry was so well renown before 2019. Areas of the global market outside of just the US mega-cap tech space have started to appear on investors’ radars, such as Japan, emerging markets, value investing, small caps, and if one is bold enough, China and the UK. In short, there are some great investment opportunities on offer in 2024 from across the entire investment landscape for active management to take advantage of.

UK Equities
It’s no secret that the UK equity market has been unloved compared to global peers, especially as today’s leaders of artificial intelligence have propelled US equity markets along with supply chain linked companies in Asia and Europe. Add to that, high levels of economic and political uncertainty. However, there are reasons to be optimistic from an investment perspective. Valuations in the UK are cheap, in particular the FTSE 100 where there’s been a tremendous amount of share buyback activity - a sign that companies recognise their own stock is trading at discounts. Earnings growth from giants such as Unilever, AstraZeneca, BAE Systems, and Tesco have also been strong, outpacing expectations. A possible reduction in interest rates is another positive tailwind for the UK as inflation pressures continue to ease. With these factors at play, the UK landscape looks attractive and current valuations certainly provide a cheap entry point for investors to add exposure.