GLOBAL – Despite continued market weakness and investor caution, the time is right for investors to begin increasing their exposure to equities, says Deutsche Asset Management (DeAM), the investment management arm of German financial services group, Deutsche Bank.
Although DeAM admits predicting the bottom of the market is impossible at the moment, shares in all regions will go up within the next two years, it claims.
DeAM says markets are falling because of investor fears about accounting practices and valuations, whilst European insurance companies have been forced to sell off stock.
Acknowledging this leads to continuing dire market sentiment, DeAM points out that valuations for fundamentals are improving and this should support a recovery in the next few years.
Overall, DeAM identifies 10 reasons why investors with balanced portfolios may want to increase their equity weightings:
•markets historically bounce after bubbles burst
•the bear market is extended in time and scale compared to others
•markets overvaluation have been corrected.
•markets valuations are further supported by low real bond yields
•other asset classes are losing value compared to equities
•there is a recovery in global economies and corporate profits
•most major market bottoms have been marked by scandal or crisis
•the long-term gains from equity investing require staying invested
•indiscriminate selling suggests we are nearing the bottom
•market sentiment is at extreme, oversold levels