The UK is increasingly regarded as a key destination for active equity investors, drawn by attractive valuations, long-term growth potential and earnings resilience. This is according to a study from Rathbones Asset Management of 100 IFAs, discretionary fund managers and private banker fund selectors with collective assets under management of £234 billion.
More than nine in 10 respondents believe UK equities represent a ‘generational valuation opportunity’, with 88% agreeing and a further 5% strongly agreeing.
During the last 12 months, 74% of fund selectors surveyed have increased their total portfolio allocations to the UK. One quarter made no change and only 1% decreased their investment in UK stocks.
Alexandra Jackson, Director of Equities, Rathbones Asset Management, said: “After years of being overlooked, sentiment looks to be improving. The UK market offers access to high-quality companies at attractive valuations, many of which generate significant revenues globally while also offering compelling income for investors.
“There is significant variation in company quality, earnings resilience and long-term growth potential across the UK, which creates opportunities for skilled stock pickers to add value. In a market where valuations remain attractive but inefficiencies persist, active management can help investors identify selective opportunities across UK equities.”
The research also points to a strong appetite for active approaches to UK equity exposure. Nearly three quarters (74%) of respondents say they construct a custom portfolio using individual direct shares. Just 6% exclusively use passive index tracking funds, while 3% outsource entirely to active UK equity managers. One in seven research participants use a managed direct share portfolio to invest in individual UK equities.
The study also highlights participants’ strong interest in the FTSE 250, with respondents viewing mid-cap stocks as one of the strongest catch-up trades for 2026. Almost three quarters (73%) of respondents were likely, and 25% were very likely, to increase their allocation to UK mid-caps this year.
Jackson added: “UK mid-cap companies stand out as an attractive catch-up opportunity, offering exposure to innovative, high-quality businesses that could benefit as investor sentiment improves and interest rates normalise. In a world where many global equity markets appear fully valued, UK equities may play an increasingly important role in building resilient, diversified portfolios for clients.”
However, the research also suggests fund selectors remain alert to risks within parts of the UK market, particularly the concentration of the FTSE 100.With just ten companies including Shell, HSBC and AstraZeneca accounting for more than half of the main index’s capitalisation, 16% of respondents say they are critically concerned that the index is too top-heavy and they will move client allocations out of passive strategies towards active, concentrated or mid-cap managers.
Almost three quarters (72%) say they are moderately concerned and will monitor the concentration closely, noting that the FTSE 100’s dominant companies offer strong dividend yields and still align with their clients’ portfolios.
Just over one in 10 (12%) see concentration in the FTSE 100 as a minor issue, arguing that the same phenomenon is evident across the world and that such mega-cap stocks are diversified global companies, helping to mitigate pure UK domestic risk.
Jackson said: “While many of the FTSE 100’s largest constituents are exceptional businesses with international revenue streams and attractive dividend characteristics, relying too heavily on a small number of companies can limit diversification and increase portfolio risk over time. This is where active management can add value. It gives investors the flexibility to look beyond the index, balancing exposure to high-quality large-cap names with carefully selected mid-cap and underappreciated businesses that offer long-term growth potential and exposure to new themes.”