Global economic shocks have failed to capsize the equity market, which remains 'remarkably resilient', according to Tristan Hanson, head of asset allocation at Ashburton.
He says equities remain the “preferred asset class on a medium-term view” for the Jersey-based active investment manager.
The equity market's strength owes partly to the wider economic recovery, which has seen corporate profits and cash flows continue to rise. Extremely low yields on cash and bonds have also bolstered the appeal of this asset class. Growth-focused investors continue to transfer their money into equities, especially those in emerging markets, and this provides an “underlying bid” to the market, said Hanson.
Another factor is that equities have been relatively unaffected by recent headline-grabbing events such as the Japanese earthquake. Though the cost of the earthquake in terms of human suffering was great, its effect on equity prices will be offset by Japan's reconstruction efforts, said Hanson.
Though Ashburton is concentrating on equity investing, Hanson pointed to one other asset class with a promising outlook: “High-yield corporate bonds remain attractive and find relative value in some emerging markets and at the long-end of the yield curve in the US and UK,” he said.
©2011 funds europe