The outlook for the UK equity market remains mixed, according to an industry expert.
Having traded within the narrow 4300-4600 range for some time, September saw UK equities break northwards, rising through the 4700 level, but Mike Felton, manager of the ISIS UK equity and ISIS UK Prime funds, cautioned that "now isn't the time to make heroic market calls".
Little had changed in the overall environment, he said.
"UK data has been mixed. While we feel interest rates may well have peaked at 4.75 per cent, there is still a risk of another 0.25 per cent rise.
"There is also anecdotal evidence that the housing market is slowing, which is good news, so long as the slowdown doesn't turn in to a collapse."
Economic growth in the UK is predicted into 2005, albeit at reduced levels, due, in part, to the impact of the oil price.
"It really is a mixed picture with on the one hand robust corporate earnings, very strong cashflow and an appealing yield. However, these are offset by rising interest rates in the US, the surging oil price and concerns about the strength of economic growth," Mr Felton said.
"One basic theme running through both portfolios is a general underweight exposure to low growth, ultra defensive stocks.
"We feel valuations here, in areas such as non-cyclical consumer goods, are not overly expensive but neither are they cheap given the challenging environment they face and the consequences of a lack of growth."
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