Editorial & Advertiser Disclosure Global Banking And Finance Review is an independent publisher which offers News, information, Analysis, Opinion, Press Releases, Reviews, Research reports covering various economies, industries, products, services and companies. The content available on globalbankingandfinance.com is sourced by a mixture of different methods which is not limited to content produced and supplied by various staff writers, journalists, freelancers, individuals, organizations, companies, PR agencies Sponsored Posts etc. The information available on this website is purely for educational and informational purposes only. We cannot guarantee the accuracy or applicability of any of the information provided at globalbankingandfinance.com with respect to your individual or personal circumstances. Please seek professional advice from a qualified professional before making any financial decisions. Globalbankingandfinance.com also links to various third party websites and we cannot guarantee the accuracy or applicability of the information provided by third party websites. Links from various articles on our site to third party websites are a mixture of non-sponsored links and sponsored links. Only a very small fraction of the links which point to external websites are affiliate links. Some of the links which you may click on our website may link to various products and services from our partners who may compensate us if you buy a service or product or fill a form or install an app. This will not incur additional cost to you. A very few articles on our website are sponsored posts or paid advertorials. These are marked as sponsored posts at the bottom of each post. For avoidance of any doubts and to make it easier for you to differentiate sponsored or non-sponsored articles or links, you may consider all articles on our site or all links to external websites as sponsored . Please note that some of the services or products which we talk about carry a high level of risk and may not be suitable for everyone. These may be complex services or products and we request the readers to consider this purely from an educational standpoint. The information provided on this website is general in nature. Global Banking & Finance Review expressly disclaims any liability without any limitation which may arise directly or indirectly from the use of such information.

Investors favour risk aversion and turn to safe haven assets

  • CFA UK survey reveals investors see better value in government bonds than previous quarter
  • But level of respondents finding value in emerging market equities declines to the second lowest level seen since the first Valuations Index survey in 2012
  • Investors turn to gold, typically seen as a safe haven

CFA UK today released the results of its latest Valuations Index, which measures investors’ perceptions of the value of equities, bonds and gold.

The survey indicates a risk-off mentality amongst investors in Q2 2018, with those polled seeing most value in safe haven assets.

According to the Index, investors’ outlook on government bonds has improved compared to the previous quarter. Perceptions of overvaluation decreased 4%, dropping from 80% in Q1 2018 to 76% in Q2 2018.[1] The yield of government bonds, meanwhile, increased slightly over the same period.

On the other hand, the Q2 2018 survey reveals that 4% more respondents are struggling to find value in emerging market equities. Although more than two thirds of investors polled still believe emerging market equities are either undervalued or fairly valued, this is the second most bearish observation of the asset class since the Valuations Index began.

Investor’s views of developed market equities remain largely comparable with Q1 2018. Whilst the percentage of respondents noting overvaluation is considerably lower than the recent peaks in Q3 and Q4 2017 (74% and 73% respectively), at 64%, it is clear that concern continues.

Perceptions of corporate bond overvaluation also remain very high, with 79% of respondents now perceiving the asset class to be either somewhat or very overvalued. At 1.96%, the yield is currently its highest since Q1 2016.

Gold, meanwhile, is seen as better value in Q2 2018 than ever before in the Valuations Index. Eighty percent of investors polled said they perceive gold as either fairly valued or undervalued, representing a 40% increase since CFA UK’s first survey of investors in Q1 2012 and a 6% jump from the last quarter.

Says Will Goodhart, chief executive of CFA UK:

“Our survey suggests an overall decrease in risk appetite amongst investors. Respondents’ confidence in emerging market equites has declined, and investors are turning towards government bonds and gold. This shift is likely a response to global trade tensions and fears of increasing tariffs ultimately putting pressure on consumer prices. That gold in particular is now seen as better value speaks to investors’ anxiety about valuations in both equity and fixed income markets. Considered a safe haven and inflation hedge, gold may be a popular choice throughout 2018.”