Caution is the name of the game

The outlook for UK equities is less positive now that interest rates are on the rise and valuations have made up ground from their low point. Many fund managers have turned cautious and are rebalancing portfolios in expectation of slower growth or even a downturn. Graham Kitchen, fund manager at Invesco Perpetual, is unsure how far last year"s rally can continue. He says: "Growth from here will be more difficult. Valuations are fair, they are not cheap, while interest rates are rising and consumer debt is huge. Unemployment is low, so the debt can probably be serviced, but the capacity ...