Roundtable

Global equities

The case for investing in global equities is compelling. The FTSE All-World Index improved by more than 20% in 2017 and thanks to upbeat global growth forecasts for this year the case for adding an international flavour to UK equity portfolios remains strong. The FTSE, S&P 500 and Japan’s Topix hit record highs in early […]

January 2018

The case for investing in global equities is compelling. The FTSE All-World Index improved by more than 20% in 2017 and thanks to upbeat global growth forecasts for this year the case for adding an international flavour to UK equity portfolios remains strong. The FTSE, S&P 500 and Japan’s Topix hit record highs in early January as investors are happy to stomach more risk, a result of lower bond returns and bullish outlooks from economists. The price of oil hitting a four-year high of $70 a barrel and expectations of growing corporate earnings, especially in the US, are cited as reasons to maintain a bullish stance. But it is not only about generating returns. Building a global portfolio of equities could also provide much needed diversification, especially at a time when the UK economy is not growing as quickly as it was once believed to be. There are other concerns. Some believe that valuations, especially in the UK and the US, are overheating. The S&P 500, for example, was trading at 26 times earnings at the time of writing. The benefit of having a global investment strategy is that there are alternatives if you feel some markets are expensive. The main option today appears to be the emerging markets, which are coming back after a few difficult years following a collapse in commodity prices. Finding attractive markets is a tough task, especially in the developing world where the flow of corporate data is not on par with that in the developed world. This is changing with some companies improving their governance policies in a bid to be more shareholder-friendly. Then there is political risk, especially with the frosty relations between North Korea and the US continuing to hang over the world. To tackle such political and governance concerns perhaps the best approach could be to pick stocks based on fundamentals not geography. This is a case of the right stock, not the right country. With so much to debate we brought a group of owners, investors and advisers together to discuss the most effective global equity strategies. You can read a transcript of their conversion on the link below.

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