'Overdone' recession fears making equity risk premiums attractive

Signs of price stabilisation

Multi-asset investments have historically provided a decent return, and this remains true in today's low-yield environment, notwithstanding uncertainties that have plagued financial markets this year.

Being invested remains a relatively safe prospect and this is evident in the relative yields available as one moves further out the risk curve. Equities offer attractive dividends, and high yield bonds still offer decent coupons. This is especially true in Europe, where two-year German government bonds are yielding minus 50 basis points and negative yields are extending further out the curve. The resultant improvement in spreads is one of the reasons that mixed funds are an effective solution. As a consequence of some of the more pessimistic commentary, parts of the market are pricing...