Fund managers did not expect any downward lurches even before Wednesday's announcement as many of the proposals had already been disclosed.
The consensus was that the UK's heavy bias towards overseas earnings and the defensive nature of many of its leading companies would minimise the impact of lower spending in some government departments.
WHAT THEY SAID...
"I do not think the Comprehensive Spending Review will have much impact on the UK equity market which is more likely to be affected by the confused global environment."
- Colin Morton, Rensburg Fund Management.
"The impact on the wider market...has been well digested by investors. In recent months we have been selectively buying companies somewhat exposed to UK government spending, such as Logica, Balfour Beatty, Hays and BAE Systems, as a fairly bearish outcome was already priced in."
- Jeremy Thomas, chief investment officer, UK Equities, RCM
"Investment in transport has largely been protected and in some areas increased....In addition, there could be opportunities for some support services companies as a degree of outsourcing will be inevitable."
- Peter Lees, head of UK equities at F&C Asset Management
"I have been avoiding UK consumer focused stocks which are likely to be negatively impacted by public sector job cuts...I continue to hold outsourcing companies which, over time, should benefit from increased opportunities to help government departments increase efficiency."
- Aruna Karunathilake, manager of Fidelity’s UK Aggressive Fund
“Contrary to general perception, a large amount of infrastructure spending in the UK is to be protected from Government cuts. It is especially encouraging to see that there is continued investment in projects that are most likely to support economic growth including renewable energy and transport projects.”
- Giles Frost, Director of International Public Partnerships Ltd
