British pension funds used to have up to 55% of their assets in UK equities. That might have been too much. Now it’s more like 5% (and 70% in US equities). That might be too little. Why? Because those UK equities are cheap and US equities are expensive, explains Temple Bar Investment Trust Portfolio Manager Ian Lance on this week’s episode of Merryn Talks Money.

He also argues that there’s an inverse correlation between the price you pay for an equity and the return you get on it long term. The less you pay, the more you get. So why are most investors holding lots of expensive things and not many cheap things? It is the “maddest thing in markets,” he says. Maybe it’s time to do something else: Lance says buy UK oil and mining companies—and maybe Marks & Spencers, too. 

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British pension funds used to have up to 55% of their assets in UK equities. That might have been too much. Now it’s more like 5% (and 70% in US equities). That might be too little. Why? Because those UK equities are cheap and US equities are expensive, explains Temple Bar Investment Trust Portfolio Manager Ian Lance on this week’s episode of Merryn Talks Money.
He also argues that there’s an inverse correlation between the price you pay for an equity and the return you get on it long term. The less you pay, the more you get. So why are most investors holding lots of expensive things and not many cheap things? It is the “maddest thing in markets,” he says. Maybe it’s time to do something else: Lance says buy UK oil and mining companies—and maybe Marks &amp; Spencers, too.  Sign up to John Stepek's daily newsletter Money Distilled. <a href="https://www.bloomberg.com/account/newsletters/uk-wealth" data-destination="rte:bind">https://www.bloomberg.com/account/newsletters/uk-wealth</a>

Merryn Talks Money with Bloomberg senior columnist Merryn Somerset Webb is your key to understanding how markets work – and how you can make them work for you. Every episode features a relaxed but in-depth conversation with a fund manager, a strategist, a Bloomberg expert or just someone Merryn finds particularly interesting in any given week. Listen in for the kind of insights and explanations everyone can use to help them make better saving and investing choices.

Merryn Talks Money with Bloomberg senior columnist Merryn Somerset Webb is your key to understanding how markets work – and how you can make them work for you. Every episode features a relaxed but in-depth conversation with a fund manager, a strategist, a Bloomberg expert or just someone Merryn finds particularly interesting in any given week. Listen in for the kind of insights and explanations everyone can use to help them make better saving and investing choices.

Merryn Talks Money

Why You Should Stop Selling UK Equities

https://api.omny.fm/orgs/e73c998e-6e60-432f-8610-ae210140c5b1/clips/760ce2c3-b4cb-4d81-b909-afce015a52eb/transcript