Why investors should rotate out of UK cyclicals

ON UK GROWTH

TB EEA's UK manager David Urch explains why he has been avoiding pricey defensives in favour of Shire Pharamaceuticals and Barratt Homes.

Barring the occasional wobble, the UK market has been steadily rising for much of 2013. Following this re-rating, we are soon likely to enter a period in which investors become more discriminating. In such an environment, growth is likely to be the key differentiator. Stocks with positive earnings potential should continue to reward investors, while those that have been carried by the rising market are likely to remain flat or pull back. In particular, we are concerned about a number of traditionally more defensive sectors such as consumer staples and utilities, which have become expe...