Warning: members of the public are being contacted by people claiming to work for AXA Investment Managers UK Limited.  Find out more information and what to do by clicking here.

UK Multi-Cap strategy - December 2021

  • 12 January 2022 (5 min read)

The market concluded that omicron is probably less disruptive to economic growth 

  • Bank of England unexpectedly increased interest rates for the first time in 3 years
  • Stock selection in Healthcare contributed to performance
  • Travel and leisure companies rebounded on optimism that omicron would be milder

What’s happening?

Having started the month with a broad sell-off, owing to concerns over the Omicron variant of Covid, the market gradually came to the conclusion that this strain of the virus is highly transmissible but probably less dangerous, and thus less disruptive to economic growth. A surprising development came in the middle of the month, when the Bank of England (BoE) unexpectedly increased interest rates for the first time in more than 3 years. The BoE described the decision as finely balanced. The lack of clarity on whether Omicron would be inflationary or disinflationary seems to have swung the decision to hike, along with the BoE feeling under pressure from headline inflation which is forecast to peak in Spring 2022 at around/above 6%.

The UK equity markets managed the traditional ‘Santa rally’ through the final month of 2021 and unlike much of the rest of the year where style, size and currency factors skewed performance, during December the market’s advance was broadly spread. The FTSE All Share (+4.68%1 ), FTSE 100 (+4.75%1 ), & FTSE 250 (ex-Investment Companies, +4.95%1 ), while the FTSE Small Cap (ex-Investment companies, +5.83%1 ) performed strongest of all. Over the 12 months, the FTSE 100 (+18.40%1 ) performed in-line with the FTSE 250 (ex-Investment Companies, +18.35%1 ), while the FTSE Small Cap (ex-Investment companies, +31.26%1 ) outperformed.

Portfolio positioning and performance

The strategy outperformed the FTSE All Share in December. Stock selection contributed positively to outperformance, particularly within the health care sector where the strategy benefitted from its position in Clinigen. The underweight position in the financial sector was also positive. Clinigen’s share price rose 54.4% in December on news the company was in advanced talks with Triton Investment Management on a possible takeover offer.

The strategy also benefitted from its positions On the Beach (online retailer of beach holidays) and TI Fluid (manufacturer of automotive parts). Travel and leisure companies, including On the Beach, rebounded in the second half of December on optimism that the omicron variant would be a milder strain of Covid-19.

Detractors over the month include Boohoo Group (an online fashion retailer), Ascential (media business specialising in information services) and Rentokil (the world’s largest pest control company). Not holding British American Tobacco also detracted from relative performance. Rentokil pulled back following news that it is to acquire US peer Terminix for approximately US$6.7bn. Whilst the deal makes strategic sense, the size and unexpected nature of it caused some investor concern.

We used share price volatility to add to core holdings and make reductions.


Market direction in 2022 seems likely again to be shaped by Covid and inflation. Central banks performed a U-turn on inflation in 2021, shifting from a reassurance that it would be a “transitory” reflection of the post-lockdowns bounce back to an acceptance that it is more persistent. With expectations that inflation will peak in the Spring, there is the chance that central bank policy mistakes could be made. Striking the right balance between slowing the economy as it recovers and not allowing it to overheat will be hard to achieve, especially while withdrawing other monetary support.

There are, of course, reasons to be optimistic about equities in 2022. Economists are forecasting that global real GDP growth will remain above trend. In addition, global inventory levels remain low and the process of rebuilding them will be a further tailwind through 2022. Earnings forecasts are modestly set and valuations should not be a barrier to further progress following the strong earnings growth in 2021 which brought some multiple compression. 

In this environment, we continue to focus on those companies that we believe can compound their earnings and where balance sheet strength is supportive of that growth. 

No assurance can be given that the UK Multi-Cap Strategy will be successful. Investors can lose some or all of their capital invested. The UK Multi-Cap strategy is subject to risks including; Equity; Smaller companies risk; Liquidity risk; Investments in small and/or micro-capitalisation universe; Investments in specific countries or geographical zones.

  • U291cmNlOiBCbG9vbWJlcmc=
  • U291cmNlOiBCbG9vbWJlcmc=
  • U291cmNlOiBCbG9vbWJlcmc=
  • U291cmNlOiBCbG9vbWJlcmc=
  • U291cmNlOiBCbG9vbWJlcmc=
  • U291cmNlOiBCbG9vbWJlcmc=
  • U291cmNlOiBCbG9vbWJlcmc=
Read the full article
Download report (215.39 KB)


    Not for Retail distribution: This document is intended exclusively for Professional, Institutional, Qualified or Wholesale Clients / Investors only, as defined by applicable local laws and regulation. Circulation must be restricted accordingly.

    Past performance is not a guide to current or future performance, and any performance or return data displayed does not take into account commissions and costs incurred when issuing or redeeming units. The value of investments, and the income from them, can fall as well as rise and investors may not get back the amount originally invested. Exchange-rate fluctuations may also affect the value of their investment.  Due to this and the initial charge that is usually made, an investment is not usually suitable as a short term holding.

    This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities. The strategies discussed in this document may not be available in your jurisdiction.

    Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

    Issued in the UK by AXA Investment Managers UK Limited, which is authorised and regulated by the Financial Conduct Authority in the UK. Registered in England and Wales No: 01431068. Registered Office: 22 Bishopsgate, London EC2N 4AJ. In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.

    Risk Warning

    The value of investments, and the income from them, can fall as well as rise and investors may not get back the amount originally invested. 

    Are you an IFA or other Professional Investor ?

    Are you a financial advisor, institutional, or other professional investor?

    This section is for professional investors only. You need to confirm that you have the required investment knowledge and experience to view this content. This includes understanding the risks associated with investment products, and any other required qualifications according to the rules of your jurisdiction.