Morningstar IM looks to Germany and Korea for relative value

New positions set up despite drop in equities exposure

Morningstar Investment Management has initiated positions in German and South Korean stocks despite reducing its overall exposure to equities in favour of cash, amid markets that are "all somewhat overvalued".

The firm said its forward-looking expected returns for each of the major asset classes show "nearly all equity markets are overvalued in absolute terms". Portfolio manager Emma Morgan cautioned: "We think investors need to adjust their expectations of asset returns." As a result, the firm's managed portfolios have "slightly less aggregate equity exposure than normal", with an underweight in the US. Why German equities are set to weather the storm However, Morningstar IM sees relative value in some markets, and has been "looking to take advantage of some pockets of opportunity". ...