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The best opportunities to reap returns from undervalued global equities have passed, according to a new analysis released by Mercer.
The head of Mercer’s Dynamic Asset Allocation team in Australia, David Stuart, said the company had brought its global equity rating back to ‘fair value’ from ‘undervalued’ as the growth in global equity markets slowed over the past quarter.
“We remain optimistic that corporate earnings will continue to recover, but the markets have now built in a reasonable amount of expectation around good news in future earnings — and this has squeezed out the potential for above-average returns,” he said.
Stuart said that Mercer also believed equity markets were in for a bumpy ride with many risks still facing global economies — meaning that the case to be overweight in global equities was no longer as strong.
