Why investors should stay cautious on housing and energy

ON UK INCOME

With the next UK election scheduled for 2015, investors should remain alert to political motivations surrounding government plans to stimulate energy and housing sectors, argues Chris Murphy, manager of the Aviva Investors UK Equity Income fund.

The third quarter of 2013 was an eventful and polarised period in the UK market. It started well with the FTSE All-Share returning 6.8% for the month of July alone, however, concern over the course of US monetary policy and a possible US-led military strike on Syria ensured that the rally was short-lived. Then came the reaction to Mark Carney’s assurances that interest rates will stay lower for longer. Bond yields edging higher suggested that the market was sceptical. For Q3 as a whole, the FTSE All-Share index delivered a respectable 5.6% due to its weightings towards the small and mid...