Developed market equities increasingly overvalued says CFA index

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Developed market equities are  increasingly seen as overvalued assets, according to the latest CFA UK Valuations Index.

The Index, which is based on a survey among 584 analysts and investors conducted in July 2014, highlights that investors are increasingly struggling to find value in assets.

More than half of investment professionals view developed market equities as overvalued, this figure has increased from 39% at the start of the year, while only 12% of investment professionals still see value in the asset class.

This development is even more pronounced with government and corporate bonds. A majority of 75% of respondents considers government bonds to be overvalued, 72% of respondents view corporate bonds as overvalued. Among the traditional safe haven assets, gold performs relatively better, with 37% of respondents indicating that it is overvalued.

Emerging market equities remain the only asset class which is currently viewed as undervalued by 50%. However, this represents a decline compared to 57% in the previous quarter.

Will Goodhart, chief executive of CFA UK comments on the results: “In spite of serious geopolitical events, stock markets are at or close to highs. However, our research indicates that investors are increasingly cautious about valuations and this may affect the way that capital is allocated over the remainder of the year.”

Mona Dohle
Mona Dohle speaks German and Dutch, she is DACH & Benelux Correspondent for InvestmentEurope. Prior to that, she worked as a journalist in Egypt and Palestine. She started her career as a journalist working for a local German newspaper. Mona graduated with an MSc in Development Studies from SOAS and has completed the CISI Certificate in International Wealth and Investment Management.

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