‘Gary, where do I put my money?’

As a wealth manager specialising in investments, this is the one question I get asked most.

Investment management at Brewin Dolphin is all about creating a personalised portfolio of assets to achieve an investor’s objectives.

Asset allocation, stock selection and an understanding of clients’ needs is key to success.

While fixed interest, property, international equities and alternative investments such as hedge funds are all critically important in building a successful diversified portfolio, it is our positioning within the UK equity section of the portfolio that grabs the attention of the majority of investors.

I thought I would use these valuable column inches to outline how we are viewing the UK equity sectors at present.

Looking at cyclicals, sectors containing companies whose share prices are significantly affected by ups and downs in the overall economy, we run underweight positions in basic resources and industrial engineering.

The former, as we expect that oversupply will continue and lower commodity prices, will be required to balance the market.

The latter, as the sector is highly dependent on oil and gas and mining capital expenditure.

While the oil price has rebounded from its trough reached a few months ago, it remains below the break-even level for a large number of projects (around $80 per barrel).

On the positive side, the general retail sector should benefit from higher disposable incomes and a more benign competitive environment.

Turning attention to defensives, sectors which contain companies whose performance is less correlated with the state of the overall economy, we run underweight positions in health and pharmaceuticals and food and drug retailers.

We are underweight in health and pharmaceutical companies due to concerns regarding the prospects of the two largest companies making up this sector.

One is undergoing a portfolio restructuring with a large void left by expiring blockbuster drugs and the other remains out of favour due to price pressure and lifecycle management failure within its lead franchise, respiratory.

Price competition and negative sales growth characterise the food and drug retailers at present.

We expect tough trading conditions for the foreseeable future as the three listed supermarkets adapt to a change in consumer shopping habits and the rise of the discounters.

It is the financial sector where we are most overweight and in particular insurance.

The non-life insurance sector would benefit from a stabilisation or improvement in the pricing of UK motor insurance and rising interest rates.

Most companies in this sector hold significant accumulated premiums in short-term fixed interest securities.

Any improvement on yield would quickly increase cash flow.

The life insurance sector looks like one of the few areas with growth at a reasonable price.

We are preferring companies with unrivalled access to the growing financial needs of the Asian consumer.

No matter where in the world you choose to invest, and what in, our guidance will always depend on your individual circumstances and attitude to risk.

However, should your investment solution include an allocation to UK equities, the above will hopefully give you a taste of our current thinking.

Gary Welford is an investment manager at Brewin Dolphin

The opinions expressed in this article are not necessarily the views held throughout Brewin Dolphin. No director, representative or employee of Brewin Dolphin accepts liability for any direct or consequential loss arising from the use of this document or its contents. Any tax allowances or thresholds mentioned are based on personal circumstances and current legislation which is subject to change.