Managers are set to take advantage of domestic cyclical opportunities arising from the increasingly "bearish consensus" surrounding the UK economy, pointing to positive fundamentals being suffocated by negative sentiment from the media and economists.
Last month, Moody's cut the UK's credit rating from Aa1 to Aa2 on the back of concerns over the country's weakening public finances and the impact of leaving the European Union on economic growth.
The UK is currently the slowest growing economy in the G7, expanding just 0.3% in Q2, while earlier this year the Office for National Statistics (ONS) released figures showing growth in private consumption slowed to 0.1% in Q2; the slowest quarterly growth rate since Q4 2014.
Regulatory headwinds are weighing heavily on the country's outlook, with the UK recently branded the second riskiest market in which to do business by asset management and private equity firms, according to a Ropes & Gray survey.
As a result of these concerns, investors have been piling out of 'unloved' UK assets, with sentiment towards UK equities falling to an 18-month low in September, according to the Lloyds Investor Sentiment index.
The Investment Association's UK All Companies sector also suffered its fourth consecutive month of net retail outflows in July, totalling £214m, pushing it to the bottom of the sales chart.
However, despite all these signs pointing towards a negative investment environment, a number of managers remain quietly confident on the prospects for UK businesses and the economy.
The most high profile of these is Neil Woodford, who said after the General Election in June that he has become even more bullish about the outlook for the UK economy, as the election outcome will point to looser fiscal policy and a "softer" Brexit.
"I remain cautious on the outlook for the global economy, but more positive about the prospects for the domestic economy than an increasingly bearish consensus," he said at the time.
"If anything... the election result has made me even more optimistic about the UK economic outlook and the portfolios are positioned to benefit from this outcome over the long term."
Despite remaining more cautious on his outlook for the UK, Rory McPherson, head of investment strategy at Psigma IM, said Moody's downgrade would have little impact on markets due to the retrospective nature of the decision.
He said: "The ratings agencies do not have much clout. If it was [a downgrade] which would take them in or out of a bond index that would make a difference, but downgrading one notch is a moot point."
Meanwhile, commenting on the UK savings rate being lower than pre-2007 levels, David Kneale, head of UK equities and co-manager of the recently launched UK High Alpha fund at Mirabaud AM, said it was no longer an accurate reading due to the self-employed paying themselves a dividend, which is not taken into account in the
"The savings rate has not collapsed, it is simply not capturing an increasingly large part of UK income," Kneale said.
"My suspicion is the genuine savings rate is running at the highest level it has done in my career, if not my lifetime.
"It just makes total sense, as the High Street is not booming and the housing market is not booming. If there is not a house buying or shopping spree going on, then it makes sense the consumer is not spending any money."
Leader of People's Party
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Aims to encourage competition in industry
Markets went into freefall
Issued 50,000 new shares