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Stay overweight equities, says Mercer
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| David Stuart |
Investors should not feel global equities have become overvalued despite the continued rally in the share market, according to a Mercer Dynamic Asset Allocation report.
The report, issued this week, suggested investors remain overweight in global equities, with Mercer’s head of dynamic asset allocation in Australia and New Zealand, David Stuart, saying the company was continuing to recommend international equities for medium-term investors.
“While the markets have rallied in recent months, the window is still open for global equity investment at good prices,” he said. “A stronger outlook for corporate profits has been built into valuations to some degree, but we still see the potential for impressive earnings growth, underpinned by significant improvement in operating margins.”
Stuart said despite valuations moving closer to what Mercer regarded as fair value, it still believed global equities should offer above average returns over the medium term.
“We are recommending institutional investors remain overweight in this asset class,” he said.
The Mercer Asset Allocation rated Australian shares as fair value and elevated Australian unlisted property from overvalued to neutral.
AUTHOR
Mike Taylor
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