The proportion of investors who view bonds as being overpriced decreased significantly from 79% to 67% in the first quarter of 2016, while those who regard corporate bonds as overvalued fell sharply from 73% to 58% – the lowest figure in three years, following an uptick in Q4 2015.
But there was a much more substantial change in the proportion of respondents regarding corporate bonds as undervalued (up to 16% from 6% three months ago), compared to the number that view government bonds as undervalued (up to 8% from 5%).
In addition, the perception of developed market equities as overvalued falls to a two-year low, and investors who viewed them as undervalued doubled from 13% to 27%.
“These changes in perception around value in both the bond and equity markets are significant. Both follow periods in which those markets have recovered much of the value that they held towards the end of last year,” said Will Goodhart, chief executive of CFA UK.
He added: “While most respondents continue to be concerned that bond valuations are pricing in too long a period of low interest rates, a growing number of respondents appear now to believe that we may be entering a sustained period of close to zero or falling real interest rates. Equally, some respondents appear to believe that, despite the recent rebound, equity markets may still offer value.”
Meanwhile emerging market equities continue to be seen as undervalued, according to CFA UK. Perceptions of gold remained broadly flat, “almost equally split between those who see the class as undervalued and those that think it is overpriced,” said the organisation.
