Pioneer Investments recommends that investors should trim their stakes in US equities, Bloomberg reported. The investment firm said the improvement in the economy has lessened the scope for the stimulus given by the US Federal Reserve to fuel more gains in stocks.
Information gleaned from the Pioneer website revealed that the company had EUR 169 billion of assets under management as of September 30 this year. Its global investment hubs are located in Boston, Dublin and London but it has operations in 27 countries around the world.
Giordano Lombardo, the Group Chief Investment Officer of Pioneer, told Bloomberg, "Markets have anticipated the improvement in the economy, so going forward it will be more important to look at the improvement in the economy and less at the moves of central banks. The point is: the marginal effectiveness of unconventional monetary policy is shrinking."
The monetary stimulus has remained great and as a result, Lombardo said his firm has continued to retain more equities than are represented in asset allocation models, the report said. His recommendation is for investors to have an underweight position in US equities while holding an overweight position in European, Chinese and Japanese shares.
According to the report, the minutes of the meeting of the Federal Reserve which was released on November 20 revealed that officials will think of tapering its USD 85 billion monthly bond purchases if there is an improvement in the economy that is in line with their forecasts. Because of the monetary stimulus, the Standard & Poor's 500 Index have more than doubled. The report said this has brought the measure of US equity volatility to its lowest level earlier in 2013 since February 2007.
Lombardo told Bloomberg, "We need to recognize we are entering a more dangerous stage of the the equity market. That is why we are more and more cautious about the U.S."
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