British pension funds used to have up to 55% of their assets in UK equities. That might have been too much. Now it’s more like 5% (and 70% in US equities). That might be too little. Why? Because those UK equities are cheap and US equities are expensive, explains Temple Bar Investment Trust Portfolio Manager Ian Lance on this week’s episode of Merryn Talks Money.

He also argues that there’s an inverse correlation between the price you pay for an equity and the return you get on it long term. The less you pay, the more you get. So why are most investors holding lots of expensive things and not many cheap things? It is the “maddest thing in markets,” he says. Maybe it’s time to do something else: Lance says buy UK oil and mining companies—and maybe Marks & Spencers, too. 

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