JOHCM's Lowen: Why we are avoiding siren call of defensives

ON UK INCOME

Many commentators' assessments of economies and markets are currently very pessimistic, yet most equity markets have managed to deliver a useful total return over the first seven months of 2012.

Ultimately, this is because valuations in many areas are modest enough to absorb a high degree of uncertainty. Interestingly, it is the over-owned markets such as the Far East and other emerging markets that have struggled the most. The weather, the Jubilee celebrations and now the Olympics and the associated distortions are all making reading the UK economy difficult at the moment. But employment trends, other aggregate lead indicators and the feedback from companies about their trading performances suggest a slightly better, more flattish environment. We are also encouraged by the o...