US equities: Overvalued or an opportunity?

Most equity measurements - from CAPE to earnings yield - suggest the US market is significantly overvalued. Geoff Legg, investment manager at Kennox Asset Management, explores the options for investors who still want exposure to the market

Last month, the S&P 500 reached a record high, following significant gains in March and April. While the US market underperformed European counterparts slightly in the first quarter of 2015, the outperformance of the market over the last 15 months has been astonishing. In sterling terms, it has risen 25% versus 7% in Europe, and zero in the UK (see table).  Given these trends, investors are faced with legitimate questions that have cropped up regularly in recent months: is the current US trend sustainable, and are US equities overvalued?  The answer to these questions will dictate how...