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The general belief among fund managers is that the UK will probably perform better than continental European markets in the near term. Finding a good offshore UK equity fund, though, continues to be a problem, according to re-searchers Forsyth Partners. For its model portfolio, Mercury OST UK has been favoured up to now, and is retained for its global perspective. Its continued focus on growth stocks with positive earnings momentum has served it well recently. It has been reweighting the portfolio in favour of FTSE shares which now account for 75%.

The Schroder ISF UK Eq-uity fund, is 5% underweight-ed in FTSE stocks, concerned by the lack of breadth to the market which focuses on large caps only. These continue to be re-rated in line with global trends, but ac-cording to fund manager, Phil Hardy, this process is finite and there will be some mean reversion in the me-dium term. Forsyth has switched out of Perpetual's Offshore UK Growth fund in favour of HSBC and Flemings funds. Both have a blue chip bias, which is where Forsyth believes investors should be focused. Richard Newell

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