Henderson Global Investors head of multi-manager funds Bill McQuaker says a lack of confidence is preventing investors from taking advantage of current equity market valuations.
McQuaker says uncertainty is preventing investors from changing portfolios and investing in equities.
The fund manager says: “The global equity market is on the right side of fair value and within that Europe is especially cheap and Japan is not that far behind it.
“There is a valuation case to be made for equities and I think it is fair to say this valuation case has been around for a while.
“It begs the question ‘why does the equity valuation argument not have more traction?’ One of the key issues there is confidence.”
McQuaker says there are curently very low levels of trading volumes.
He says: “There has been a collapse in trading volumes and that tells you something about the degree to which investors are uncertain about the future and as a result are unwilling to change the shape of their portfolios.”
McQuaker says most people want “a safe, high-yielding asset that allows them to sleep at night”.
He says: “Unfortunately, that does not exist.
“If you want safety, then the yield that is available typically is by historical standards very low. If you look at deposit accounts, they are pretty safe but have no yield. If you want yield, you have to take some risk.”