By: Peter McLean
When I think about how the investment landscape has changed over
the past few years, it's very difficult to exaggerate the
magnitude of this disruption that
that we've had. Of course,
you know, it's worth reminding ourselves that even just late
2021 a quarter of the global bond
market was yielding Less Than Zero.
And this is all been a result of the huge injection of
liquidity that came into the into the system
following the the pandemic three years
ago. The situation today is quite different.
Central banks around the world have taken measures to reverse
a lot of that policy the Federal Reserve in the
US have increased their fed funds rates by 4.5%
just in the past year, which
is a very significant amount in such a short space
of time. So that's caused a lot of disruption and both
Bond markets and Equity markets have
had to reprice as a result of that. So we've
seen bond yields rising and
remember that as yields rise the price of
those Securities fall, but also in equity markets a
number of equities which are trading on very high valuations have
seen those adjusted down as well. So this
was all behind the very difficult year. We had in
2022 when both bonds and equities suffer
double digit declines situation. We
haven't had for decades
Now the good news about this is that looking forward
it means the opportunity for long-term returns has
improved on a global basis. We're seeing
price to earnings ratios trading towards the
bottom of the historic range and short dated
bonds are now yielding in some cases
three to four percent. Let's remember only
a couple of years ago that we yieldings zero or
less than zero in some cases. So this is quite a
substantial move. And of course it underpinned a better outlook
for the long term investors now,