In November, equity markets set new records in most regions even despite widespread scepticism in bond markets, which notwithstanding a modest rise in long-term yields are still not impressed with the global economic outlook.
Some investors have asked whether it is a good idea to maintain an equity exposure at a time when markets are so expensive and when equity markets rally to new record highs. There are several reasons why it still makes good sense, despite these conditions, to have a solid portfolio allocation to equities. Firstly, suggesting that equity markets are trading at the highest level ever is incorrect, as this should in fact be the case fairly often with an asset class delivering an average return of 7-8%.
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