Defensive equities now adding value: Aviva Investors

Aviva Investors' fund manager Mervyn Douglas says the equities rally does not mean the asset class is overvalued.

Instead, Douglas says price to earnings ratios are at their lowest level in 25 years when normalised for a 10-year economic cycle. "When combined with a market yield of around 5%, we believe this makes a compelling case for owning equities relative to owning risk-free assets on a three-year horizon," he adds. Companies he finds attractive include Unilever and Diageo, the former because it has been through a radical streamlining process, and the latter due to its potential scope for improvement, driven by cost reductions. "While our strategy is still to look for stocks capable of de...