In an update to FGIT investors, he said fund allocators have become disenchanted with and are disinvesting from UK equities – with only 4% of the UK’s pension assets invested in domestic companies compared to 50% two decades ago.
Train believes the UK has become a “backwater of global equities markets”, following a tumultuous month which saw several companies opting to list in New York over London.
London loses sole spot as top financial centre as city ties with New York
The manager said not only has the lack of big tech companies hindered the UK market’s performance, corporations’ “generosity” with dividends has “sometimes been at the expense of the building of long-term business value”.
He added this can be seen by the lack of a “globally significant technology champion” in the “upper echelon” of the equity market.
Train provided the example of Dutch semiconductor equipment manufacturer ASML, whose shares went up 16-fold over the last ten years and is now commanding a market capitalisation 20% bigger than Shell’s – proving not only American or Asian companies win when it comes to technology.
The manager argued the increase in international ownership of UK companies was “no bad thing”, however. “Perhaps smart global investors can help UK companies pursue growth strategies better than liability-haunted UK pension funds.”
Nick Train: UK corporations ‘handicapped’ by their UK stock market listing
Yet Train is convinced things are not as bad as they may seem for the UK stock market and economy, as the country has one of the most tech savvy population in Europe and in the world, with untapped tech adoption having the potential to boost the UK economy by £232bn a year.
“UK private investors are willing to have a go, if presented with promising opportunities. Let’s hope the corporate sector can oblige and that the next wave of British ingenuity will create another ARM, or even a UK Google,” Train concluded.
