Talib Sheikh, managing director and senior portfolio manager at JP Morgan Asset Management, said equities looked cheaply valued at present even if they are not as cheap as when equities bottomed out in 2008-9.
Periods of volatility like the past few weeks take time to work through, he said, believing equities had the best chance to perform above inflation on multi-month and multi-year timelines.
“We are gingerly buying equities, however we are not pouring money in as we still acknowledge there are huge risks in the market,” the London-based manager said.
He said, if markets were not headed for a double dip, then investors were seeing “interesting valuations”, adding his fund was overweight US equities.
“We believe it is presently worth paying for quality,” said the manager of the JP Morgan’s Multi-Asset Income Fund.
Clare Hart, vice president and portfolio manager of the JP Morgan US Equity Income Fund said the US was not heading for a recession but it was something she would keep in mind in her portfolios.
Fluctuations in the market have proven to be opportunities to add companies where interesting though the New York-based manager warned of selling too soon.
“In these market conditions, many investors tend to sell off more than is appropriate. Then they over buy after the markets pick up,” she said.
Hart believed equities are currently at “extraordinary values” compared to bonds.
“The reverse yield gap has re-reversed on a global scale – US, UK and Europe dividend yields are all above their respective bond yields,” she said. “This valuation phenomenon is very rare – it has only been seen in five of the past 360 months in the US.”
