Where is the real value for UK investors?

Simon Gergel, manager of The Merchants trust, explains why he is finding opportunities in mega caps and specific recovery situations.

The UK equity market is at an interesting point heading into 2015. Although the FTSE 100 index is trading close to the top of its range in recent years, it does seem to offer reasonable value. But where is there real value for the UK investor, particularly those looking for an attractive dividend yield? UK equities are trading around an average 13.6x 2015 P/E ratio, not far from the long-term average, suggesting they represent far better value than government bonds and cash, which offer meagre returns at best. However, there are relatively few companies trading at the market average ...