UK

While the UK economy has been performing well, there are a number of corporate, economic and political headwinds which mean the outlook for UK economic growth is less clear going forward. Ernst & Young cite UK profit warnings at their highest Q3 level in six years, mainly due to competitive price pressures, so we can see that, despite the chancellor's sanguine outlook, we are not out of the water yet. Deflation is looming as is eurozone contagion. In the third quarter, there were 69 profit warnings issued by UK companies, compared with 56 in the third quarter of 2013.

The market dislikes nothing more than uncertainty and uncertainty may hurt markets in the run up to the UK general election. The TV debates will be crucial and it looks unlikely that any party will achieve an overall majority. The economy and markets could cope with some mild political uncertainty, but not the huge disruption from an EU exit, which is far more worrying.

Chelsea Selection or Elite Rated*: Artemis UK Special Situations and Liontrust Special Situations

*by fundcalibre.com