Nick Samouilhan - multi-asset fund manager, Aviva Investors
The FTSE
We expect to see further gains from here, on the basis of an improving domestic economy.
Europe
Relative to other developed equity markets, we expect to see strong returns from European equities on the back of relatively cheap valuations. In addition, we expect further expansionary monetary policy from the ECB, with this feeding into European equities as well as the rate and credit markets.
Emerging markets
We expect to see further relative underperformance of emerging market equities versus developed market equities. This is due to continuing economic headwinds in these countries, and while they have become better valued versus developed equities than in the past, their valuations still do not fully compensate for their short-term risks.
US
The US market has in its favour an improving domestic economy, albeit with a poor first quarter. However, markets have priced in expectations of strong earnings for US equities this year, and firms would need to exceed those to deliver strong returns from here.
Property
The UK property market is currently generating strong yields, particularly relative to other asset classes, as well as undergoing one of its episodic periods of strong capital growth. We see both of these continuing in the near term.
Bond yields
Yields on bonds remain at historical low levels, and their further rally in the first quarter caught many active investors by surprise. While we don’t see a significant sell-off in the short term, we don’t see much return over the near future beyond that offered by the carry yield, which is barely above inflation.
