Investors should take advantage of the “unusually” low volatility in equities markets to reposition their portfolios, says Henderson Global Investors.
Speaking at an adviser roadshow in Sydney yesterday, Henderson head of Australian equities Lee Mickelburough warned that some of the trends driving investment markets may be at a "high water mark".
"A lot of the bull markets in bonds and stocks have been driven by low interest rates, globalisation, digitalisation and political stability," Mr Mickelburough said.
If any of these four trends reverse – something that may already be happening when it comes to globalisation given the rise of populist leaders around the world – there could well be consequences for investors, he said.
But given the uncertain environment for investors, volatility in stock markets is very low, Mr Mickelburough said.
The US S&P500 index has not seen a fall of more than 1 per cent for over 78 days, he said.
In addition, the VIX index, which measures the implied volatility of the S&P500, suggests investors believe there will only be an 11.3 per cent movement (up or down) in the stock market in the next 12 months.
"The low volatility has come from the low interest rates, low inflation and geopolitical stability. If that's going to reverse we can see volatility picking up," Mr Mickelburough said.
"The good news is that if you're looking to reposition your clients portfolios it's not too late. Markets are high and volatility is low, so there is plenty of opportunity to reposition."
The balance sheets of the big four banks are increasingly exposed to residential mortgages, as other forms of revenue generation become less...
New data reveals Australian investment banking activities generated US$1.4 billion in the first nine months of the year, a decrease of 27.9 ...
Bloomberg has announced US equity benchmark capabilities that will form the basis of its new ESG index family of investment products. ...