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By David BUCKLE, Head of Investment Solutions Design, Fidelity International
We are only three weeks into the New Year, yet the 2018 conversations I’ve had with clients reveal why equity markets continue to soar: investors’ demand for yield is not waning one jot. The risk required to generate yield doesn’t appear to concern investors - they’re more focussed on delivering a return, or income yield, closer to the inflation rate. Valuation is less of a worry to them and as long as that mentality persists, markets will continue to rise.
Negative interest rates forcing more risk-taking
In Europe, this demand for yield is very pronounced. The culprit is the negative interest rate. The European Central Bank’s monetary policy objective is to...
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