Concerns over slowing global growth have seen 'safe haven' assets perform well over the past six months.
Such is the demand for these assets that about 30% of the bonds issued by governments and companies worldwide (almost £14trn worth) are now trading on negative yields.
This has made gold, which offers no income, look relatively attractive as a store of value. But the price has already had a strong run this year, up 17.5% at the time of writing, and some investors will be wary about buying at these levels.
Meanwhile, as a result of Brexit uncertainty, UK equities now trade at a significant discount to both historic averages and comparable developed markets.
This is true of smaller companies, which are often viewed as more domestically focused.
However, many UK-orientated companies continue to trade well and grow their dividends. Examples include hard landscaping products manufacturer Marshalls and the Big Yellow Self Storage Company.
The significant devaluation of sterling has provided a boost for global FTSE 100 companies with a high proportion of overseas earnings.
However, there are plenty of strong global businesses further down the market cap spectrum where valuations are more attractive.
One example is Bloomsbury Publishing, which generates revenues in the US, Europe, Australia and Asia.
Given the combination of low valuations and sterling weakness, UK companies have increasingly become targets for M&A activity.
Acquirers are foreign companies and also cash-rich private equity houses.
Our fund has seen a number of takeover bids across various sectors since the 2016 referendum, with the pace accelerating recently. The list includes Manx Telecom, RPC and Dairy Crest, with Sanderson and BCA being the most recent.
This can push up valuations on other stocks in the same sectors that may trade on discounted multiples. It reinforces our view that deep value can be found in pockets of the UK market, despite the uncertain backdrop.
We continue to focus on cash-generative companies with strong balance sheets paying sustainable dividends.
Given the low returns available from bonds, we see a diversified portfolio of such equities, yielding more than 4.5%, as an attractive proposition for those seeking steady income.
Siddarth Chand Lall is manager of the Marlborough Multi Cap Income fund
• Pockets of deep value to be found in the UK market, despite Brexit uncertainty
• Increased M&A activity focusing on UK companies
• Concerns about slowing global growth weighing on equity markets
• Brexit uncertainty continues to act as a drag on UK equities