Twitter icon Email alerts icon Latest News RSS icon Magazine icon Stay connected:

View the article online at

Tom Becket's uninspiring US road trip

by Tom Becket on Apr 30, 2014 at 14:04

The greatest risk appears to be from rising interest rates and Treasury yields. However, we believe this threat is not excessive for the remainder of 2014. There is increasing complacency in credit markets, mostly driven by investors’ demand for yield, but I do not see this as a threat this year.

In short, be willing to accept credit risk, but look to restrict interest rate risk. Our positioning with mostly high-yielding, short duration funds therefore seems sensible.

We have been structurally underweight US equities for the last year and we will remain that way.

Evidence from companies (admittedly distorted by the effects of a dreadful winter) is that profit growth this year should be close to the range expected by analysts – namely high single digits percentage growth.

Such an outcome, while far from certain, seems sufficient to justify current equity valuations mostly, especially given that interest rates, inflation and other asset classes’ yields remain so low.

But with US equity valuations rich by historical comparison, any disappointment will be punished. However, I don’t see any reason why, based upon our economic forecasts, US equities cannot return circa 6% annualised over the next few years.

However, we feel there are better opportunities in Asia, Japan and selected European markets.

Sign in / register to view full article on one page

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: Bringing it all back home

As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.

Today's top headlines

Investing for income in a changing environment

With talk on interest rates on the horizon, our latest roundtable debate covers income investing against a changing backdrop

More about this:


On the road

Click here to find out more from the Audience Development team.

Sorry, this link is not
quite ready yet