The Q4 2017 results revealed that investors are less confident in finding value in EM equities, with only 36% believing the asset class to be undervalued – 5% lower than in Q2 and Q3 2017.
The Valuations Index, which measures investors’ perceptions of the values of bonds, equities and gold, also found that the investors considering EM equities to be overvalued has increased to 31%, up 6% from the previous quarter.
Likewise, a vast majority of investors (73%) ranked developed market equities as overvalued and the number viewing EM equities to be fairly valued dropped from 35% in the previous quarter, to 33% in Q4.
However, as overall faith in EM dropped, investor confidence in gold increased with almost three quarters of investors (74%) considering the mineral to be either fairly valued or undervalued, compared to 69% in the previous quarter.
The results reflect a significant drop of more than $90 (£64) in the value of gold since the last Valuations Index in Q3 2017.
Meanwhile, the percentage of investors believing corporate bonds to be expensive dropped slightly in Q4 to 79%, down from 82% in Q3 and from an all-time high of 84% in Q2.
Despite remaining high at 78%, the number of investors identifying government bonds as overvalued continued to steadily decrease as well, returning to the same level as it was in Q1 2017.
Will Goodhart, chief executive of CFA UK, said: “The respondents to our survey are still worried. Most believe bonds and developed market equities are overvalued and, following their run up over the past few quarters, fewer now believe that emerging markets equities are undervalued.
“The increased interest in gold suggests that respondents are looking for a store of value should their fears be realised, though it’s also important to recall that our survey ran late last year, a time when the gold price had fallen steadily for a quarter and was starting to run back up.
“Overall, our survey suggests that while market returns remain impressive, so too do the anxiety levels about the sustainability of those returns. For the time being at least, we go on climbing the wall of worry.”
