The proportion of U.K. chartered financial analysts that views developed market equities as being overvalued has reached the highest level since the society's valuations index was created three years ago.
The latest index, which polls the CFA Society of the U.K.'s 11,000 investment professionals, shows 61% view developed market equities as very overvalued or somewhat overvalued, as of June 30. That is a 17% increase on results in the first quarter of 2015, and a more than 24% increase from the second quarter 2014.
The CFA Society of the U.K. polled its membership between May 20 and June 4. It received 379 responses from analysts and investors, who were asked to rate markets in terms of representing fair value on a one-year time horizon.
Very overvalued was categorized as being more than 15% above fair value. Somewhat overvalued is a view of being less than 15% above fair value.
At the other end of that scale, just 10% of respondents said developed market equities are undervalued, meaning they are below fair value.
Emerging market equities also were viewed as being overvalued by 30% of respondents vs. 25% at March 31. The number of respondents who see them as undervalued remained at 43% in the quarter. That compared with 57% of respondents, who said emerging market equities were undervalued at June 30, 2014.
The fear of a bond bubble remained. Government bonds were the most overvalued asset class, according to 79% of respondents. That compared with 81% at March 31, and increased from 71% at June 30, 2014.
Corporate bonds were seen as overvalued by 74% of respondents, down slightly from 76% at March 31, but up from 65% as of June 30, 2014
Developed market equities were represented by the MSCI Developed Market index, which closed at $1803.72, May 19. Emerging market equities was represented by the MSCI Emerging Market index, closing at $1040.89, May 19.
Government bond valuations were based on the J.P. Morgan Global Government Bond index, which yielded 1.57% at close, May 19. The S&P International Corporate Bond index yielded 1.93% at close, May 19.
