Sharp rise in equity returns may not continue
The sharp rise in equity returns, particularly dividend stocks, may not continue as a trend in 2014, according to two funds management executives.
Hyperion's chief investment officer Mark Arnold and portfolio manager Jason Orthman said the increased investor risk appetite was welcomed, with many clients moving back into growth assets such as equities.
"And when it comes to which stocks are favoured, the companies that can demonstrate the potential to deliver positive future earnings growth have been trading at premium price to earnings (P/E) ratios," said Arnold.
Furthermore, in the current low interest rate environment, dividend stocks were another major focus for investors in 2013. However, Arnold had cautioned that this trend may not continue.
"The long-term outlook for credit growth is subdued, and with regulatory requirements for higher capital levels, earnings per share (EPS) growth from the big banks is unlikely to move above the mid-single digit level for the next five years," said Arnold.
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