Asset allocation: Proceed with caution

Asset allocation

Mayank Markanday, portfolio manager at Russell Investments, explains why expensive valuations across all sectors suggest investors should be extra cautious in current markets.

Heading into the fourth quarter of 2014, we find ourselves increasingly debating the same issues we did this time last year. While equity markets have gradually ticked up on the back of improving economic conditions, treasury and government yields remain compressed and continue to trade at the very lower end of their trading range. An environment of low volatility has generally persisted, consistent with a solid economic backdrop, aside from a few geopolitical/non-fundamental-related volatility spikes, and the search for yield has continued, forcing conservative fixed income investors to...