The outlook for bonds continues to be good, the firm said. Investors can take advantage of one of the most attractive entry points for bonds than any that has been seen in years.
“The rally began with yields generally positioned at undervalued levels relative to our equilibrium models, a situation that has appeared only a handful of times over the past 40 years, including the global financial crisis and a brief spike in 2013, the investment report said.
Emerging markets currencies also are looking attractive over the long term, the report said.
“We have found that emerging market and developed market equities performance occurs in long cycles and the factors that have held emerging markets back in the past decade look set to reverse,” Laurence Bensafi, portfolio manager and deputy head of emerging markets equities, said in the Emerging Markets Outlook report.
The attractive outlook for emerging markets is seen in part because of the weakening dollar compared to other currencies.
“We are relatively more cautious on emerging-market currencies in the short term, although as a group they are likely to benefit over the longer term from a persistent decline in the U.S. dollar,” Bensafi said.
“The improved emerging-market earnings outlook in turn suggests better relative performance for stocks in emerging markets,” he added. “From a valuation perspective, emerging-market equities continue to look particularly cheap in comparison with developed-market equities.”