Achieving fair value status will be a long and volatile process

Although there has been a recent upturn in volatility, the economic landscape has improved significantly since the market lows of March 2009.

As banks are better capitalised, stimulus measures have triggered a recovery in global growth. The principal issue in our asset allocation discussions is the length of time it will take the market to reach our estimate of fair value. Research from the IMF suggests recovery after a recession linked to a financial crisis will be long and volatile. However, we are moderately positive on equities. Despite the lack of valuation strength and mixed market behaviour signals, we believe this is offset by an ongoing global economic recovery, driven by factors such as a low interest rate environ...