The UK’s stock market is trailing behind its global peers. One reason for this is how prominently certain sectors feature in the market. For example, while technology firms had a stellar 2023, particularly in the US, the information technology sector holds a significantly lower weighting this side of the Atlantic.
On the other side of the coin, financials, which as we’ve said had a challenging year, take up a larger chunk of the UK stock market compared with the US, as seen in the data.
Because the UK is dragging its feet a little in terms of economic growth and market performance, the forward-looking investor may well be drawn more to the US instead for the time being. But once confidence in the Bank of England’s policies and overall economic direction improves, the UK market should become more appealing again. In the meantime, the most popular strategy for UK investors will be to pick cheap stocks with worthwhile dividend yields.