They say you can lead a horse to water but you can’t make it drink, however that’s exactly what we are trying to do with this week’s cover story on the compelling value being offered in UK stocks right now.

We may be sowing our seed on stony ground – indeed according to figures from one newspaper there has been a £2.5 billion outflow of money from UK funds and trusts in the last four months compared with a £6.7 billion inflow into US funds over the same period.

To put the latter figure in perspective, it means that between December 2023 and March 2024 alone UK investors put more money into US equities than they have in total in the past nine years (£6.69 billion).

You only have to look at the net flows from DIY investors in ISAs (individual savings accounts) on the AJ Bell platform from the start of the year to 5 April so see UK punters continuing to shun UK funds and trusts.

Despite the stellar performance of the US market – or should that be because of its stellar performance – investors are pouring increasing amounts of money into both tech-focused funds and trusts and S&P 500 index trackers, which nowadays are almost as good a proxy for tech as specialist funds thanks to the excessive weightings of the ‘Magnificent Seven’.

There doesn’t seem to be much love for active management, either – eight of the top 10 most popular funds are index trackers, which makes sense if you just want be ‘in it to win it’.

According to the Investment Association, in the first two months of 2024 there were net outflows of £7.5 billion from active funds which is an even higher run-rate than last year when £38 billion of retail money flowed out of active into passive.

Sir John Templeton, one of the greatest stock pickers of all time, described bull markets as being born out of pessimism, growing on scepticism, maturing on optimism and dying on euphoria.

It’s probably fair to say attitudes towards the UK market are somewhere between pessimism and scepticism, while towards the US market they are somewhere between optimism and euphoria.

Templeton also maintained that outperforming other investors means doing what they aren’t doing, buying when others are in despair and selling when everyone else is full of hope and exuberance.

Maybe his most important advice however was ‘Focus on value, because most investors focus on outlooks and trends’.

Value matters, because if you buy cheaply you can afford to take your time when it comes to selling – or, if you are like Warren Buffett, you can decide to hold ‘forever’.

DISCLAIMER: AJ Bell, referenced in this article, owns Shares magazine. The author (Ian Conway) and editor (Tom Sieber) own shares in AJ Bell.

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