Investors should be chasing opportunities outside the US despite the positive outlook for the country’s equities, as Europe and emerging markets start to re-emerge after their five-year slowdown, JP Morgan Asset Management has argued.
The “common perception” is that US equities are set to benefit from the promise of a fiscal stimulus from Donald Trump’s administration, and JP Morgan notes that high valuations could persist for some time.
JP Morgan global market strategist Mike Bell says: “Continued healthy earnings growth with upside risk from potential fiscal stimulus and late-cycle exuberance certainly argues against going underweight US equities at this stage.”
But he adds that many investors might have missed out on the rally in European equities now that political concerns in the region seem to have subsided slightly.
He says: “Flow data suggests that political concerns led to very large outflows from European equities last year and that those flows have only recently started to return.”
The team says year to date, equity flows into Europe are up €18bn (£14bn), which compares to the €58bn outflows seen in 2016.
According to the Investment Association, equity was the best-selling asset class in May, attracting net retail inflows of over £1bn with European equities sectors recording their largest monthly inflow since September 2015 with net sales of £343m.
Following Japan, North America came fourth in the sector rankings with £147m inflows over the month.
Overall, Flanders argues the global economy has not produced any “nasty” surprises since the beginning of 2017 with both politics and economics bringing confidence back into the Eurozone “for a change”.
However, the focus will remain on central banks and whether they will continue to influence market sentiment as they did in previous years.
She says: “Now, especially, investors need to decide which is more important for asset markets: monetary policy or the underlying state of the recovery.”
It has been over four months since the surprise election of Donald Trump as US President. Despite the initial shock, the US stockmarket has continued to climb higher, with many investors forecasting that Trump will be more pro-growth than his predecessors. Watch Robin Milway, lead manager of the Neptune US Opportunities Fund, discuss the outlook […]
Many investors gave up on continental Europe in 2016, resulting in a net outflow from European equity markets for the first time in five years. Such a stance continued to make sense at the turn of this year, when optimism was riding high in the US and the risk of further populist upsets in Europe […]
Artemis European Opportunities Fund manager Mark Page is questioned about the merits of investing in Spanish supermarket group, Dia. Dia is a 7,000-store Spanish discount supermarket chain. But with cheaper food prices coming on to the market and an improving Spanish economy, journalist Alexis Xydias questions Mark about its inclusion in the Artemis European Opportunities […]
Two thousand clients of discretionary fund manager Beaufort Securities are yet to be refunded close to a year on from its closure to new business. Confirming it is still working on around 2,000 cases, the Financial Services Compensation Scheme says 3,000 of a total 17,500 retail clients affected will be given a “large part” of their […]
Aegon has appointed ex-Fidelity strategy head Ed Dymott (pictured) to the newly created role of managing director for transformation, innovation and growth. Aegon says Dymott will be responsible for strategic planning and ensuring the business is well placed to capitalise on changes in adviser and customer needs. This will involve analysis of industry developments including the latest […]
With so many different expectations, this simple document can provide a snapshot of the type of paraplanner behind the CV I am finding paraplanners and their employers are starting to get more and more divided, as neither really understands what the other does for them. On the one hand, I am speaking to business owners who […]