Jupiter's Matthews eyes defensive stocks

UK INCOME

Cyclically adjusted valuations have returned to long-term norms, and investors are no longer rewarded in kind for taking on extra risk.

We are due to see a near-term change in market leadership, whereby defensive stocks will pick up momentum and displace cyclicals as the main performers. Quality, defensive businesses should provide investors with good dividend returns coupled with the prospect of growth and the portfolio is focused towards companies with strong balance sheets, high returns on operating capital and low cyclically adjusted valuations accordingly. I anticipate further market volatility as economies attempt to pull away from recession. The recovery so far remains vulnerable, and sovereign debt problems facin...