Cautious outloook on UK shares

British fund managers have reduced exposure to UK shares and bonds because of fears that the forthcoming General Election will not throw up a clear winner with enough authority to tackle the deficit.
By The Newsroom
Published 2nd Apr 2010, 22:07 BST
Updated 2nd Apr 2010, 22:07 BST

A Reuters news agency check with 10 fund managers showed allocations to British equities in their global portfolios in March dropped to an average 14.7 per cent, from 21 per cent in February.

Exposure to British bonds fell to 17.8 per cent from 23.3 per cent the previous month.

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Neil Michael, a director of investment strategies at London & Capital, said: "Our portfolios are resilient to an uncertain election outcome as they are very underweight in sovereign debt, particularly the UK."

Opinion polls suggest no party will win an overall majority and investors fret that the next Government will lack the authority to slash Britain's budget deficit.

Standard Life head of global strategy Andrew Milligan said: "Financial markets always find it much easier to price in economic risk than political risks. We had warned clients about the dangers of sovereign debt risk, in the UK and other countries, and therefore our portfolios have been light in gilts for some time."

Related topics:LondonGovernment