The UK seems to have weathered recent storms as over 1 year to 31 August 2007; the average UK Growth & Income investment company is up 10 per cent, and up 85 per cent and 115 per cent over 5 and 10 years, outperforming the FTSE All-Share Index over 10 years. Dividends also remain strong in the UK Growth and Income sector, with an average yield of 3.5 per cent. The UK Growth sector has also performed well, with the average UK Growth investment company up 12 per cent over one year, 134 per cent over 5 years and an impressive 170 per cent over 10 years - outperforming the FTSE All-Share over all time frames.

The Association of Investment Companies (AIC), Finsbury Growth & Income Trust PLC and Value and Income Trust plc hosted a roundtable on the outlook for the UK Growth & Income investment company sector and have collated the views of key UK Growth & Income managers.

A good time for UK Equities

Despite recent volatility, both Nick Train, Portfolio Manager, Finsbury Growth & Income Trust PLC and Angela Lascelles, Manager, Value and Income Trust plc are bullish on the prospects for UK Equities. Angela Lascelles, Manager, Value and Income Trust plc said: ‘‘Since I started investing, straight out of university as a graduate training at Phillips and Drew, I have seen many bubbles burst and several superb buying opportunities. Since the late 90s these boom and bust cycles have accelerated and have caused considerable volatility in the UK equity market overall and particularly recently. At OLIM and in Value and Income Trust, we have been consistently bullish of the equity market since early 2003 but in the middle of last year we were convinced of the attractions and during this August I have been ringing in from France on the bad days, urging everyone I can think of to get as fully invested in Equities as they are able.’’

Nick Train, Portfolio Manager, Finsbury Growth & Income said: ‘‘Now is always a good time to be invested in the UK stock market, but it is especially so after the declines of the summer. The FT All-Share Index offers a wide array of companies in which to invest, operating in every industry and geography imaginable. To be bearish on the London market, therefore, is to be bearish about Global Capitalism's propensity to generate wealth into the future. This would be a bet against history and such bets are invariably loss-making. We think that the wobbles of summer 2007 can best be understood as the correction necessary to ensure an easing of incipient inflation pressures.’’

Outlook for UK dividends

Julian Cane, Manager, F&C Capital and Income Investment Trust PLC said: “During these turbulent times the income objective of F&C Capital and Income helps to provide stability of income and dividend growth to our shareholders. It also reminds us that an analysis of any long-term period in the UK stock market’s history shows that about half of the total return from investing in Equities has come from income and income growth. On this front, the situation is looking reasonably healthy as we currently expect dividends from the market as a whole to grow by close to 6 per cent this year and about the same for next year. This is a rate still well in excess of inflation, and should be driven in turn by earnings growth a little in excess of dividend growth.

“The financial turbulence that we are experiencing stems primarily from a lack of liquidity and not any significant deterioration in the real economy. Most companies are fairly conservatively managed with sound balance sheets and they should not be too adversely impacted by current conditions.’’