UK equities to get boost from bond outflows

F&C, a UK-listed fund manager, expects to see money flow out of bonds and into UK equities.

Since the announcement of open-ended quantitative easing by the US Federal Reserve in September, the yield curve has become very steep, says F&C, and investors are seeing very little returns from bonds.

“We therefore expect to see flows coming out of this asset class into equities which will be supportive for the UK market, with large companies likely to benefit the most,” the firm says today in an investment report.

However, F&C also notes that the eurozone debt crisis and the impact of budget deficit reduction measures in the US are likely to hang heavy on the UK economy.