“What has become apparent, however, is that investors’ expectations with regards to equity returns need to be recalibrated. With the current low interest rate environment dragging back the level of risk-free return, investors ought to be satisfied with 5-7 per cent returns.”
Mr MacDonald adds: “Dividend levels in many parts of the world are above the yields paid by investment grade bonds, and are even higher than some high yield debt. This, along with the potential for capital growth they offer, makes them relatively attractive. Of course, investors need to weigh up the likelihood that this potential will be realised.”
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Nyree Stewart is features editor at Investment Adviser
nyree.stewart@ft.com
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