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Weakening Pound Could Boost FTSE

Tue, 21st May 2019

The FTSE 100 has gotten off to a slow start this year, but Chris Burvill, manager of the Henderson Cautious Managed Fund, believes that the index could hit unprecedented highs in the second half of this year, potentially breaking the 7,500 barrier.

The UK's leading index has stalled out around the 6,800 mark this year, in spite of hopes, at the start of the year, that the index could hit record highs. The slow growth has been attributed in part to the strength of the British pound. The FTSE 100 has a large number of companies that sell overseas and the strong sterling has hampered earnings for those companies. However, Mr Burvill believes that the pound may be weaker in the second half of the year and that it is still possible for the FTSE to break the 7,000 barrier this year, potentially hitting 7,500 before the end of the year.

Burvill is putting his money where his mouth is, and his fund currently has an almost 50% weighting towards shares (close to the fund's maximum allowance). Burvill noted that small and mid-cap shares have been performing well in the low interest rate environment, but that large-cap shares have seen their valuations fall. He believes that this will all change over the next few months, and that investors who are alert to that potential change will do well. He expects to see the most reliable dividend payers, such as AstraZeneca and Smith & Nephew be among the top performers.

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