Too many investors find themselves concentrated into dominant sectors and herded into mega-caps. Alan Clifford, manager of the Lazard UK Income fund, says it is time for change.
It is no great secret that the UK equity market is highly concentrated. However, equity income fund managers still need to deliver a premium yield, adding to the problem of portfolios with sizeable overweights in a limited number of sectors and stocks. It is easy to see why this occurs: half the FTSE All Share yield comes from just ten companies and 87% from the FTSE 100. Of the 40 sector groups represented in the UK market, five contribute 52% of the yield. Concentration, being the opposite of diversification, carries inherent and familiar risks. While we often see large companies as...
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