Findings published in the BofA Merrill Lynch Global Research Report from its May European fund manager survey show that, while global investors plan to increase their weightings to Europe over the next 12 months, the focus is more on the periphery.

It states: “Long peripheral debt is the most crowded trade globally, and Spain and Italy are two of the top three countries where European investors would prefer to put money over the next 12 months. The defensive countries of Switzerland and the UK are the least preferred.”

The recent monetary policy announcements from the European Central Bank earlier this month, may, of course, be enough to push investors back towards the perceived ‘safer’ market of the UK, especially as inflation and rising interest rates seem to be on the back burner for the Bank of England and its governor Mark Carney (above).

Hans Olsen, chief investment officer, Americas at Barclays Wealth and Investment Management, says: “The consumer-led rebound in the UK leaves GDP close to pre-crisis peaks. In addition to ongoing retail strength, business investment rose in the first quarter, a sign that the recovery is becoming more balanced and sustainable. Of the major western economies, the UK is probably most ready for monetary normalisation, and the US is a close second. With this in mind, we suggest investors tread carefully and lightly in the bond market, and look to the equity markets in developed economies for exposure to the pickup in growth.”

Therefore, the key question in the next few months for the UK could be the impact that the forthcoming general election could have on the market, and even specific sectors, given the recent issues on energy and bookmakers that have hit the headlines over the past year.

Richard Marwood, manager of the Axa Distribution fund, notes: “Two main issues affecting markets this year are a potential interest rate rise and political events taking place in the run up to 2015’s UK general election.

“While it is a certainty that rates will rise – they are too low and need to be normalised – the timing of this is hard to call. Policy decisions as we approach this election will be difficult to predict, as shown in the recent Budget. These all have potential to shock the market, and investors need to ready their portfolios.”

Should one or other of the main political parties set out an election manifesto that targets say the ‘big, bad, banks’ or energy company profits, then UK equities could see some significant volatility ahead in some parts of the market.

Nyree Stewart is features editor at Investment Adviser