What next for UK defensives?

ON UK INCOME

The rush to defensive shares, that defined the first few months of 2013, left them richly valued. However, this soon changed when the US central bank hinted that stronger economic data may lead it to curtail quantitative easing (QE).

As markets became preoccupied with the end of QE and the possibility that interest rates may rise sooner than expected, ‘hot money’ exited the market and defensives - which tend to be larger, more liquid, stocks - suffered disproportionately. Recent events have forced investors to focus on economic and company-specific fundamentals. Economic news has been encouraging, both in the US and UK. The US recovery is becoming embedded while the UK economy also appears to be improving and the UK output is expected to pick up steadily over the second half of 2013 and into next year. Business...