The UK equity landscape is evolving, and the JPM UK Equity Core fund is anchored primarily in large-cap stocks. With assets totaling £1.5 billion, the fund’s lead manager, Callum Abbot, is hesitant to bet on a recovery for small- and mid-cap stocks. He emphasizes that the portfolio reflects a strong preference for established companies.
Focus on Large-Cap Stocks
As of March 31, 2026, over 80% of the fund’s assets are allocated to companies valued above $10 billion. Only 1.4% is invested in stocks with market caps below $1 billion. This approach stems from a significant performance gap; the FTSE 100 has consistently outperformed both the FTSE 250 and the FTSE Small Cap ex Investment Companies index in recent years.
Performance Metrics
- FTSE 100: 25.8% return in 2025
- FTSE 250: 12.9% return
- FTSE Small Cap ex Investment Companies: 10.9% return
Abbot notes, “If you are taking a big bet on small- and mid-caps, that divergence is a significant hurdle.” He prefers to focus on large-cap stocks that demonstrate strong momentum.
Investment Philosophy
The JPM UK Equity Core fund aims to build a robust portfolio of around 180 stocks emphasizing value, quality, and momentum. The team strives to manage incidental risks, such as size and macroeconomic risks, focusing instead on stock selection.
Understanding the UK Market
Contrary to common belief, the UK stock market is less dependent on the domestic economy. The FTSE 100 derives the majority of its revenues from international markets, with less than 20% sourced from the UK. This index has significantly outperformed the overall FTSE All Share, constituting about 85% of it.
Recent Stock Performances
Within the past 12 to 18 months, the fund has seen successful investments in defense contractors like Babcock and Serco.
- Babcock: Share price increased by approximately 60%.
- Serco: Share price rose by about 85%.
The increasing demand for defense spending in Europe and successful contract acquisitions have fueled this growth.
Emerging Opportunities
Abbot highlights Games Workshop as a notable investment opportunity, particularly with upcoming Warhammer releases. This aligns with broader trends in popular franchise monetization, suggesting strong potential for future growth.
Challenges and Adjustments
The fund initially invested in housebuilders, anticipating a rebound based on attractive valuations. However, the team faced challenges due to rising interest rates and regulatory issues, prompting a significant reduction in exposure to this sector, particularly Taylor Wimpey, which saw a 30% drop.
Investment Strategy
Abbot emphasizes a philosophy influenced by behavioral economics, advising caution against emotional biases in investment decisions. He references Rolls-Royce, which has made a substantial recovery post-pandemic, and notes that sectors once deemed stagnant, like banks, have now become some of the best performers since 2023.
Personal Interests
Outside of fund management, Abbot prioritizes family, particularly his three children. He maintains a passion for sports and reading as well, highlighting the importance of balance in life.
