Investment review and outlook - global

In spite of global equity market rebound, there is good value

Dr Simon Pearse, CEO of Marriott Asset Management, looks at recent global market moves and notes that equity and property markets are still attractive but fixed interest assets should be avoided

International markets saw positive returns during 2009, but on a three-year basis, the performance has been generally negative with only the J.P. Morgan Global Government Bond Index and cash (US dollar) showing positive returns.

In most advanced economies equity and property markets performed well last year, but cash and bond returns lagged considerably.

The outlook for the various asset classes is mixed. We favour property and equity investments in the current environment and believe that fixed interest assets are unattractive.

International Real Estate:
During 2009 Marriott Asset Management actively promoted quality international real estate as the income streams had become attractive with forward yields exceeding 6%. The GPR250 Real Estate Index returned 34% last year. We are still of the view that this asset class is offering good value with forward dividend yields exceeding 5% and income growth being supported as the developed economies come out of the recession. We remain confident that exposure to the Marriott International Real Estate Fund will benefit investors.

International Bonds:
With a general expectation of rising inflation in the global markets, it would be prudent to avoid US treasuries and long bonds in general.

International First World Large Cap Equities:
There has been a marked recovery in the first world economies with equity markets having performed well during 2009. There is still real value in selected large capitalisation companies in the US, UK and Europe as the dividend yields remain high at around 4% and are supported by reliable dividend streams.