Invesco Perpetual's Boyne questions P/E valuations for equities

Invesco Perpetual's Paul Boyne believes investors are wrong to use price/earnings multiples to value equity markets.

The manager of the £130m Global Equity Income fund says although P/E ratios are low, equities are not as cheap as this might suggest. “There is an argument going on in the marketplace  that, based on multiples, equities are cheap compared to historic levels,” he says. “But the multiple is a meaningless number – the only number markets should trade at is the return on equity.” Unlike P/E ratios, Boyne says return on equity (ROE) is climbing to historic highs, which makes him cautious on equity markets. “The markets may not be as cheap as they appear because return on equity is re...