The new year has started on a positive note for equities

The headlines from Prospect Wealth Management’s latest quarterly Investment Prospects:

  • New Year business surveys point to an improving economic outlook for all the major regions.
  • Political risks in the US and Europe are receding for the moment.
  • Bond yields in the UK are rising and have further to go – we remain defensively positioned.
  • Equity markets offer attractive value vs bonds and momentum is positive – we remain overweight.
  • Low volatility alternatives continue to offer attractive value in an uncertain world.

Improving confidence that a slow recovery in the global economy was taking hold led to positive returns from all the major equity markets, except the US, during the last quarter of 2012. Yet again it was the commitment from central banks to keep interest rates low and to use increasingly unconventional methods to stimulate growth that underpinned the rally. As confidence returned, so the undervalued cyclical stocks in our equity portfolios performed strongly, allowing each of our direct equity model portfolios to outperform over the quarter. Bond yields, still close to historic lows in the UK, only rose modestly, reflecting the expectation that inflation would remain around current levels in the short term…

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Posted in Market Watch