As we look ahead to 2026, fund managers in two of Jupiter’s fundamental regional equities strategies, UK Income and UK Dynamic, discuss valuations, dividends, companies facing pressure and the environment for investors.
Adrian Gosden and Chris Morrison on a culture of dividends
Adrian and Chris are investment managers, UK Equity Income
The UK economic backdrop may be mixed in the new year but we would expect a tailwind for markets if the Bank of England enters a sustained rate-cutting cycle as expected. Lower rates tend to be supportive for the economy in general and for UK domestic companies in particular.
Over the last year, UK equities posted solid returns – but there was a clear divide. Investors rewarded the companies that are global earners and have resilient cashflows while shunning more domestically focused firms. Defence, banking, and mining stocks drove the gains, while real estate, construction and industrials lagged.
This kind of divide can present opportunities for active managers like us who can identify companies whose prospects are mispriced and where short-term volatility obscures long-term value. Lower rates would benefit life assurance, property, and construction companies whose valuations have fallen to levels rarely seen in the past decade. Many of these companies offer dividend yields above 8 percent, effectively compensating investors for uncertainty.
We would expect to see a continuation of corporate activity, with private equity firms taking advantage of compelling valuations for UK-listed assets. The relative stability of sterling increases the appeal of UK assets and provides a supportive backdrop for the market.
UK economic growth is forecast to be muted, and the government’s balancing act between credibility and pragmatism has raised some concern. However, it’s important to remember that while UK represents only around a tenth of world equity capitalisation, its dividend culture remains unmatched.
Alex Savvides, Stephanie Geary and Siddharth Sukumar on companies under pressure
Alex, Stephanie and Siddharth are investment managers, UK equities
As investors, we seek to support business transformations in companies operating below their potential. This involves idiosyncratic company initiatives intended to drive value recovery and creation and offer resilience against macro-economic turbulence.
Many companies are now confronting the consequences of a peculiar economic shift—from ultra-low interest rates, globalisation and benign policy support to higher inflation, geopolitical tension, and weaker demand. They have been caught offside having either overpaid for acquisitions, overinvested in capacity and/or overdistributed to shareholders. The result has been declining profitability, rising leverage and growing stakeholder frustration.
Across sectors and market caps, boards are under pressure to act. Companies such as Reckitt Benckiser, Burberry, Johnson Matthey, BP, and Unilever exemplify this dynamic: strong franchises forced into transformation. This environment is creating compelling value opportunities for investors skilled in navigating strategic change.
Encouragingly, we are seeing greater urgency and accountability from boards willing to confront past missteps rather than wait for market recovery.
In a volatile market that continues to unsettle management teams, we focus on self-help actions, not macro forecasting. We engage with companies to prioritise operational and strategic renewal, assuming external relief is unlikely.
We think it makes sense for investors to reduce risk and shift capital toward companies with robust financials and defensive revenue streams while maintaining an emphasis on value.
The value of active minds: independent thinking
A key feature of Jupiter’s investment approach is that we eschew the adoption of a house view, instead preferring to allow our specialist fund managers to formulate their own opinions on their asset class. As a result, it should be noted that any views expressed – including on matters relating to environmental, social and governance considerations – are those of the author(s), and may differ from views held by other Jupiter investment professionals.
Important information
This marketing document is intended for investment professionals and is not for the use or benefit of other persons. This document is for informational purposes only and is not investment advice. Market and exchange rate movements can cause the value of an investment to fall as well as rise, and you may get back less than originally invested. The views expressed are those of the individuals mentioned at the time of writing, are not necessarily those of Jupiter as a whole, and may be subject to change. This is particularly true during periods of rapidly changing market circumstances. Every effort is made to ensure the accuracy of the information, but no assurance or warranties are given. Company examples are for illustrative purposes only and are not a recommendation to buy or sell. Issued in the UK by Jupiter Asset Management Limited (JAM), registered address: The Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ is authorised and regulated by the Financial Conduct Authority. Issued in the EU by Jupiter Asset Management International S.A. (JAMI), registered address: 5, Rue Heienhaff, Senningerberg L-1736, Luxembourg which is authorised and regulated by the Commission de Surveillance du Secteur Financier. No part of this document may be reproduced in any manner without the prior permission of JAM/JAMI.