The secret to success in Britain's shrinking equity market

Buyouts, buy-backs and foreign takeovers saw the UK equity market shrink by a record £64bn last year. Brian Durrant explains how to adapt your investment strategy for the new conditions.

The UK equity market shrank by a record £64bn last year amid a surge in mergers and acquisitions and share buy-backs. The figure equates to over 4% of the London equity market and represents double the rate of equitisation in 2005 and quadruple the figure for 2004.

Indeed de-equitisation is a relatively new phenomenon. Before 2004 there was a tendency for the pool of equity to deepen over time as stock from new issues exceeded the amount being taken out of circulation. The situation is entirely different now.

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