Troy's Lyon: Investors should beware the profit/price disconnect

Troy Asset Management chief executive Sebastian Lyon has cautioned on UK equities, suggesting falling UK corporate earnings are a warning sign for investors.

The manager of the £2.5bn Trojan fund said he is sticking to his limited weighting to UK equities (at 9% of his portfolio) despite the ongoing market rally. Lyon (pictured) contrasted 2012 UK earnings forecasts made a year ago with the disappointing profits that eventually materialised last year - a 12 month period in which the FTSE All Share rose by 8.2%. "A year ago, according to Citigroup, UK corporate earnings were forecast to grow by +9.7% in 2012. A year on, the outcome looks more like -7.1%, an implied downgrade of -14.5%," Lyon said. "This disconnect between corporate profi...