World Economy

Considering Alternatives

Considering AlternativesConsidering Alternatives

The search for reasonably priced equity and decent fixed income yields is taking investors towards alternatives, Investment Europe reported. Investors gated by hedge funds during the global financial crisis of the nineties may scoff at the idea of alternative investments becoming more attractive relative to traditional assets. However, for those struggling with record low interest rates and yet more quantitative easing – which in Europe threatens to significantly skew demand versus supply of risk free assets in secondary markets – the benefits are becoming increasingly attractive. German 10-year Bunds traded at a yield of 0.28% around the middle of March, while the US 10-year Treasury at 2.1% was well below a historical median estimated at 3.9%, according to one data set. Regarding equities, the S&P 500 P/E ratio was around 20x in mid-March, or some 13% higher than the multiple reported a year earlier.