The UK stock market is not known for its tech exposure but there are "gems to be found" at the lower end of the cap spectrum and especially in Aim, according to Rathbones' Alexandra Jackson.
In the latest Portfolio Adviser video interview, Jackson, manager of the Rathbones UK Opportunities fund, says there are plenty of "businesses that can generate repeatable resilient earnings growth" in the FTSE 250 and Aim in particular. "We don't have the Amazons and the Spotifys - the big household names, the brands people know about - but we often have the plumbing or the nuts and bolts behind it," Jackson says. "That's a different revenue and profit profile but it can be just as attractive and often trades on a discount just because it's the UK and the issue with Brexit over the past five years." Jackson notes in recent months the high number of IPOs and placings has helped refresh the index and says she has rarely had so many buy ideas.
"There are some brilliant IPOs available in the UK market if you can be a bit selective and not just look in the large cap areas." M&A activity has also picked up among public and private buyers as long-term capital has recognised that the UK's outperformance is not being reflected in valuations, she says. Elsewhere, Jackson reflects on how the past year has reaffirmed her confidence in the fund's process and style and she drills down into some of the names and sectors that have done well during that time, as well as those set to benefit.
She also reveals the areas she is avoiding.
Watch the video above for more.
By Sebastian Cheek, 10 Jun 21