The performance derby for UK stocks in 2023 is becoming clear. The message for professional investors is not reassuring. The stocks they have come to favour are referred to as “quality”: well-managed, non-cyclical companies offering long-term growth and strong competitive positions. In the jargon, they have “moats”, which protect them from excessive competition thanks to strong brands, high barriers to entry for market disruptors, and “pricing power” (the ability to raise prices without losing sales).
Some of these stocks have done well this year, with RELX (formerly Reed Elsevier) up by 36% and the London Stock Exchange up by 28%. But Burberry has lost 25%, Diageo 21% and Unilever 6%, while the FTSE 100 is flat. It seems that consumers’ shift upmarket in the drinks sector is not