…in fact it is quite normal for this point in the investment cycle.

What this does mean is that from here any earnings upgrades will be a reflection of the quality of earnings and is likely to be limited to those companies which have control over their capital investment programmes.  As a result, stock-picking will become increasingly important.

The response of both sterling and gilts, post-budget, has been positive, which means that a number of the more domestically focused mid-cap companies may offer some opportunities. It is a matter of knowing where to look. For example, the low ticket items of Restaurant Group mean it is less likely to be affected by a slowing UK consumer than some of the big retailers.

Recent activity across the F&C UK Equity and F&C UK Opportunities Funds has focused on the quality of earnings.  For example, the UK Opportunities Fund recent closed out a trading position in African Barrick Gold. The proceeds were used to establish a position in pharmaceuticals group AstraZeneca, which has just won a court case in the US extending the patented life of its cholesterol drug Crestor, its third best seller, for a further three years.

Both Funds are now overweight pharmaceuticals with the UK Equity Fund holding GlaxoSmithKline and long-term favourite Shire, while the Opportunities Fund also owns AstraZeneca.

In addition to the quality earnings argument, these companies also provide an element of exposure to the consumer across the emerging economies, which look set to remain the main drivers of global growth.