City of London (CTY) fund managers Job Curtis and David Smith believe the UK’s new status as a share buyback powerhouse could encourage international investors to return to its neglected stock market.

The Janus Henderson UK equity income managers referred to a report from Barclays Capital that showed FTSE 100 blue chips bought back 2.2% of their shares in the year to May, whereas S&P 500 companies in the US, which has a stronger tradition of buybacks over dividends, repurchased just 1.5%.

The UK’s pick-up in buybacks has helped deliver strong capital returns, given the market’s 20% valuation discount to international peers. The managers said the FTSE 100 had beaten the S&P 500 since the Bank of England started hiking interest rates in December 2021. Morningstar data confirms the FTSE 100 has achieved a total 25% return against 23% from the US benchmark.