The proportion of investors believing corporate bonds are overvalued has dropped for the first time in six quarters, shows CFA U.K.'s latest quarterly valuations index survey.
The index, which measures CFA U.K. member perceptions of the values of bonds, equities and gold, showed 82% believe corporate bonds are overvalued, compared with 84% holding that view in the second quarter.
The proportion of investors viewing government bonds generally as overvalued also fell, to 79% vs. 82% a quarter earlier.
But more investors are seeing equities as overvalued — 74% in the latest survey vs. 69% in the previous quarter.
Emerging market equities were viewed as a better value. The proportion of investors viewing the asset class as undervalued was 41% in the third quarter, consistent with the previous quarter.
Investors were divided on gold, with 45% viewing the precious metal as fairly valued. Comparative figures were not available.
"Central banks continue to communicate their intent to wind back the monetary accommodation put in place since the financial crisis," said Will Goodhart, CEO of CFA U.K., in a statement accompanying the data. "In the U.S., U.K. and Canada, overnight rates are already increasing and the markets are pricing in rate hikes in many other countries through 2018. Given the inverse relationship between interest rates and bond prices, it's therefore unsurprising that survey respondents remain worried about bond valuation, even if their anxieties are diminishing as yields move in the anticipated direction."
The index survey closed Oct. 18.