Proactive Investors - Natwest (LON:NWG) subsidiary Coutts was accused of another own goal after it revealed it intends to dump billions of pounds worth of UK stocks.
Barely ten months on from the Nigel Farage debanking rumpus, the bank has told clients it needs to end its home bias and focusing on UK shares was an “anachronism that had to change.
Coutts's decision comes at a time when companies are deserting the London Stock Exchange to other markets and when the government is trying to organise the sole of its remaining 28% stake in NatWest through a sale to the public.
Fahad Kamal, Chief Investment Officer, said in a letter: “Currently, about 20% of a standard balanced portfolio here is UK stocks, which is something of an anachronism
“It would be closer to 3% or 4% if it were more commensurate with the proportion of UK stocks in global stock markets. So this is a recalibration. We are adjusting our compass accordingly.”
David Broomfield, a fund strategist at the bank, added it was difficult to access themes such as technology through the UK.
Six UK equity and bond funds run by Coutts will now “recalibrate” to 65% in North America, 13% in Europe, and 3% in the UK.
Peel Hunt (LON:PEEL) analyst Charles Hall commented: “The government is aiming to sell down…its stake in NatWest in the summer, but at the same time Coutts is reducing fund allocations to the UK”
“This will inevitably put further selling pressure on the UK market at a time when valuations are already depressed.”
A Coutts spokesperson told the Standard: “We retain significant investment in the UK and our investment strategy is to achieve the best returns for our clients in the most attractive markets.
“We closely follow the performance of all markets in line with our individual client needs and our House Views are subject to constant review.”