Dan Kemp: It's been a very volatile start to the year for investors and most recently, we've seen a very large bounce in share prices particularly. So, the question that investors are asking, that we're asking as an investment team is what's happening next, what should we be doing with our money? I think there are a couple of interesting points about this market which is worth thinking about when doing that sort of planning.
The first is that although share prices have risen quite sharply over the last few weeks, fixed income prices, bond prices, are still very high and they imply a negative real yield, that's after inflation, a negative real yield, over a long period to come. So, they still look very expensive to us even though investors generally are getting more excited. So beware of bonds.
And even in the equity space we are still seeing only niche areas that look very attractive from a valuation perspective. Despite the falls and the subsequent rally, there are not a lot of opportunities out there from our perspective. Mainly they are concentrated in the emerging markets and Japan, energy stocks, some other niche areas which are quite difficult to access and not necessarily the basis for a broadly diversified portfolio.
So, in summary, we just encourage investors to think long-term, avoid the emotional rollercoaster that comes from being part of the herd and remain focused on valuations. That's really what's going to drive returns in the long term.
