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Fund sector reviews

UK sector review – what’s next for the UK stock market in 2024?

We look at what’s happened in the UK economy, how the stock market’s been coping, and how our Wealth Shortlist funds have performed.

Important information - This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

The UK’s heading into 2024 after a stronger than expected 2023. Unemployment’s sitting at 4.2% (similar to the G7 average) and inflation has dropped significantly over the year.

Here’s what might matter most to UK markets in 2024.

This article isn’t personal advice. If you're not sure if an investment is right for you, ask for financial advice. All investments fall as well as rise in value, so you could get back less than you invest. Past performance isn’t a guide to the future.

A spotlight on the Bank of England’s monetary policy

Focus on the Bank of England’s (BoE) monetary policy is likely to continue in 2024 and when it might start cutting interest rates from the current 5.25%.

We’ll get a better sense of what the year ahead could hold when the BoE’s Monetary Policy Committees meet for the first time this year on 1 February.

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The BoE’s seen evidence that tighter monetary policy (higher interest rates and lower money supply) is leading to a looser labour market and this is weighing on economic activity. But with services price inflation and pay growth higher than other major developed economies, the bank won’t want to take its foot off the brake too early.

So, rates aren’t expected to rise much higher, but it might be well into the second half of the year before we start to see any cuts to the base rate.

Will there be a general election in 2024?

Another theme for 2024 is elections.

The UK is expected to be one of 76 countries globally holding elections in 2024. This covers 51% of the global population and 59% of global gross domestic product (GDP).

Sir Kier Starmer’s opposition Labour party is currently leading the Conservatives in the polls. This leaves Prime Minister Rishi Sunak with an uphill battle and little time to make his case to extend his party’s 13 years in power.

This could mean the election happens later than expected this year, and even a slim chance it falls in January 2025. That’s the latest Sunak can call an election and would give the government more time to deliver on its priorities.

UK income opportunity

The UK stock market’s still out of favour with a lot of investors, but we think it’ll remain an attractive income market.


FTSE All Share index yield

The UK has a long reputation as a happy hunting ground for income investors. And with the FTSE All Share index yielding 3.96%, it’s still one of the highest yielding equity markets. It’s also home to many world-class companies selling their goods and services internationally.

The UK has some exceptional fund managers with great records of adding value. We’ve selected those we think have the greatest long-term performance potential on our Wealth Shortlist.

How have UK Wealth Shortlist funds performed?

Our Wealth Shortlist selections delivered mixed performance over the past year, and we tend to expect this from such a wide range of funds.

Investing in funds isn't right for everyone. Investors should only invest if the fund's objectives align with their own, and there's a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a long-term diversified portfolio.

For more details on each fund and its risks, see the links to their factsheets and key investor information below.

UK Growth

The best performing fund in the UK Growth section of the Wealth Shortlist over 2023 was the Aegon Ethical Equity fund with a 14.91%* gain.

The fund invests in the UK and appears in the Responsible section of the Wealth Shortlist given its exclusions-based approach – it avoids investing in companies involved in activities deemed unethical. This approach means we expect it to perform differently to the broader UK stock market, and its peers in the IA UK All Companies sector.

AXA WF UK Equity was the weakest performer of our selections in the UK Growth sector of the Wealth Shortlist. It rose by 4.42% over the year, lagging the FTSE All-Share index by 3.50%.

Annual percentage growth

Dec 18 – Dec 19

Dec 19 – Dec 20

Dec 20 – Dec 21

Dec 21 – Dec 22

Dec 22 – Dec 23

Aegon Ethical Equity






AXA WF UK Equity






FTSE All-Share






IA UK All Companies






Past performance isn’t a guide to the future.
Source: Lipper IM, to 31/12/2023.

UK Equity Income

The best performing fund of our UK Equity Income selections over the last year was the Janus Henderson UK Responsible Income fund, managed by Andrew Jones. The fund returned 13.10% over the year, 5.18% ahead of the FTSE All-Share, which rose 7.92%.

This is an exclusion-based fund, avoiding areas like tobacco, alcohol and oil and gas and could offer some diversification to a traditional equity income portfolio. Like Aegon Ethical Equity, it appears in the Responsible section of the Wealth Shortlist.

Our worst performing UK Equity Income selection over this period was the Trojan Income fund, managed by Blake Hutchins. The fund rose in value by 5.26% over the year, but lagged the FTSE All-Share return by 2.66%.

This is disappointing, but we think the fund has significant investments in companies that aren’t as reliant on a strong economy to thrive. So, we expect the fund to hold up better than the index in falling markets, but lose ground in a rising market.

Annual percentage growth

Dec 18 – Dec 19

Dec 19 – Dec 20

Dec 20 – Dec 21

Dec 21 – Dec 22

Dec 22 – Dec 23

Janus Henderson UK Responsible Income






Trojan Income






FTSE All-Share






IA UK Equity Income






Past performance isn't a guide to the future
Source: Lipper IM, to 31/12/2023.

UK Small & Medium sized companies

The strongest performer in the UK Small and Medium-sized section of the Wealth Shortlist over the past year was the FTF Martin Currie UK Mid Cap fund. The fund rose by 9.72%, but this was 0.31% behind the FTSE 250 ex Investment Trust index over that period.

The managers invest in medium-sized companies within the FTSE 250, often considered the ‘sweet spot’ between company growth potential and maturity.

Richard Bullas is an experienced small and medium-sized company investor, and he has the support of a team we rate highly. Investors should note the fund invests in smaller companies, which adds risk.

Our weakest selection in this sector over the last year was the WS Amati UK Smaller Companies fund. It fell by 7.29%, lagging behind the FTSE Small Cap ex Investment Trust index and the IA UK Smaller Companies peer group.

The fund’s exposure to higher-risk smaller growth businesses has hurt performance in a higher interest rate environment.

This has been a difficult year for the fund, but we think lead manager Paul Jourdan is an experienced smaller companies’ investor with the potential to deliver good returns over the long term.

Annual percentage growth

Dec 18 – Dec 19

Dec 19 – Dec 20

Dec 20 – Dec 21

Dec 21 – Dec 22

Dec 22 – Dec 23

FTF Martin Currie UK Mid Cap






FTSE 250 ex Its






WS Amati UK Listed Smaller Companies






FTSE Small Cap ex Its






IA UK Smaller Companies






Past performance isn't a guide to the future
Source: Lipper IM, to 31/12/2023.
Important information - Please remember the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. This article is provided to help you make your own investment decisions, it is not advice. If you are unsure of the suitability of an investment for your circumstances please seek advice. No news or research item is a personal recommendation to deal.
Written by
Joseph Hill
Joseph Hill
Senior Investment Analyst

Joseph is part of our Fund Research team. Having joined HL in 2017 initially on a graduate scheme, he's now integral to our analysts who select funds for our Wealth Shortlist. He also analyses the UK Growth, UK Equity Income and UK Smaller Companies fund sectors, providing expert insight for our clients.

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Article history
Published: 12th January 2024