Choosing between expensive defensives and cheaper risk assets

Equity investors today seem to have only two options: to invest in expensive companies or those with inherent financial risk attached, according to Simon Gergel, manager of the Merchants trust at Allianz Global Investors

Something unusual is going on in the financial markets. The European Central Bank last month announced it was going to engage in quantitative easing or asset buying to prevent deflation and hopefully reinvigorate the eurozone economy. Alongside similar decisions in the US and Japan, such monetary policies are driving financial repression, effectively pushing interest rates to very low, or in some cases, negative levels, and forcing investors to move their money into riskier and higher yielding assets, such as real estate and equities. Risky assets However, investors are nervous a...