M&G's Fishwick: What is the best response to the market rally?

EQUITIES

Dave Fishwick, head of macro and equities investment at M&G, assesses the continued attractiveness of equities in light of the recent rally.

Since around the middle of last year, those of us who believe that backing ‘value’ offers a route to earning favourable investment returns over the long term have been encouraged by rising equity markets, narrowing corporate credit spreads and weakness in ‘safe havens’. However, it is not so much the recent risk rally in itself that is important, but the nature of these developments, which appears to suggest that the extreme valuation anomaly between equity and bond markets over recent times has been caused by investor fear, rather than fundamentals. It is notable that risk assets hav...