Attractive returns still out there for investors

NN Investment Partners (NNIP), formerly known as ING Investment Management, says that assets are still offering attractive returns, with the global risk premium, at 4.5%, still above its long-term average of 2.9%.

NNIP head of multi-asset, Valentijn van Nieuwenhuijzen, said: “The decline in risk premiums in both equity and bond markets since 2009 suggests there will be less upside over the next five years compared with what we have seen over the last five, but that does not mean attractive returns have become impossible to find.” According to the NNIP multia-sset team, very loose monetary policies have created an unusual environment, but there are still opportunities to be found through dynamic asset allocation. In particular, the team are overweight equities and real estate, as risk assets which have a reasonable risk premiums.

NNIP is positive on European equities, van Nieuwenhuijzen commented: “The very unusual macro landscape, the biggest recession since WWII, unusually large output gaps and persistent downtrends in inflation, that is already too low, justifies unusual monetary policy. The current central bank policies have contributed significantly to the recovery of the global economy. It might have led to some unusual price levels in parts of the financial markets, and especially fixed income, but near-term reversals still seem unlikely given the commitment of policymakers, and certain parts of the markets continue to offer attractive opportunities for investors.”