CCLA cautiously bullish on equities
0CCLA, investment manager of over £1.5bn of local government assets, remains optimistic on equities.
At its Investment Seminar for Local Authorities held in London this week, James Bevan, chief investment officer, outlined the investment manager’s central expectations for the major asset classes.
Global equities came top with an anticipated return of 5.7% per annum.
Bevan cautioned that the outlook is particularly uncertain, but CCLA believes there is a low probability of deflation – the biggest threat to share prices.
The multi-asset investment firm also holds that there is a lot of scope for stock picking, with the number of global companies on low forward price/earnings ratios, and in particular those trading on a multiple of 20 or less looking healthy by historical standards, in spite of the recent highs in the US.
Bevan stated that CCLA’s central case for cash was minus 1.50%, and for sterling bonds minus 1.00%.
For UK property the central expectation was for a positive return of 1.5%.
Bevan described the markets are particularly uncertain.
The outcome of Brexit is hard to call, there is the risk of escalating trade tension between the US and China.
Europe has seen a notable slowing in its purchasing manager indices, which are widely followed forward-looking indicators.
Consequently, the potential for divergence from CCLA’s central cases is wide.
However, the past three years have been good for returns with global equities returning over 50%.
CCLA’s call occurs with US equities in retreat from their October highs, dragging other markets down in their wake.
The US sell-off has been prompted by concerns about the diminishing effects of the Trump stimulus, worries about the trade spat with China, and many thinking US earnings will begin to slow.
