The UK’s unloved stocks have never fully recovered from Britain’s exit from the European Union, but that could all be about to change.
Adrien Gosden, lead manager of the Jupiter UK Multi Cap Income fund, said at MIC UK 2025 that the UK stock market is currently seeing a return to favor.
“This year because of tariffs at the beginning of April things have got choppy [elsewhere], while the UK has just been steadily chipping away. And that is what the UK offers because [here] we’re starting from a big discount to what things are worth. There are some things you could argue are overpriced. They were the story, and everyone got involved in it, but now things are changing.”
In Gosden’s view, the environment has been slowly building to potentially produce something of a boon for UK stocks. And global volatility, triggered by President Trump’s tariffs, has just accelerated that shift in investors’ perception of the London-market.
Interest Rate Falls on the Cards
He points to the velocity of deals in London, across market caps, with UK large cap stocks buying back their own shares at a record pace, expectations that interest rates will continue to slide downward this year, and the UK’s prime position due to its trade surplus with the US.
Jupiter’s Gosden believes that against this backdrop “the UK knows where it is going.” And he says it won’t face the same level of uncertainty as other markets. In this case, UK equity income “is a good tool for investing over the next six months,” he said.
Sectors to Watch
One of the sectors that Gosden is bullish on, is property. It is the first time in a decade that property is in the Jupiter UK Multi-Cap fund. He also sees REITs as a section of the London stock market that is highly susceptible to takeovers as bigger REITs absorb their smaller rivals.
LondonMetric Property LMP, the largest REIT in the fund at 2.68%, has recently made an offer worth £674m for Urban Logistics REIT. Segro SGRO and Empiric Student Property ESP are also REITs that feature in the fund at 2.11% and 2.15%. But to hedge for the uncertainty in global markets Gosden is backing the utilities sector in the UK, which he deems “the hard cousin of interest rates.”
“You do not necessarily buy utilities unless you are slightly worried about the outlook because they are robust. They are reliable and they give you a good dividend yield. You buy those because you think interest rates might come down.”
National Grid NG. makes up 2.32% of the fund and is backed by Gosden because of its attractive dividend yield of 5.14%. Year to date National Grid is up over 11% and is currently trading at £10.69 above Morningstar’s Fair Value Estimate of 970p.
The state of play for the pharmaceutical sector is still uncertain. 5-star stock GlaxoSmithKline GSK is the top holding of the fund at 5.33%. However, Gosden is waiting to see whether impending tariffs from Washington on the sector will land and what their impact will be.
“Pharmaceuticals are a good sector, with good cash generation, and they are good dividend payers. But we do not know what the tariffs are. So, we have to get ready. They are also changing personnel at the FDA and some of them do not like vaccines. If you invest in a company that does vaccinations, you will need to find out a bit more about these people.”
A Focus on UK Domestic Stocks
Overall, Gosden is also positioning his fund to include more UK domestic players backing UK supermarket Sainsbury’s SBRY. The four-star stock makes up 2.03% of the fund but has not been owned by Gosden for almost a decade.
He is also bullish on Ibstock IBST, a British-product manufacturing company, that makes bricks which it sells onto UK housebuilders like Barratt Redrow BTRW.
“So going 100% UK at the moment isn’t the most stupid thing to do when you don’t know whether the tariff in China is 145%, 65%, or 0%. It could be anything. So, it gives us a bit more certainty,” he says.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
