Since the Global Financial Crisis (GFC) in 2008, central bankers worldwide have pursued expansionary monetary settings to buoy tepid economic growth by cutting policy rates and buying government bonds. As a result, low interest rates have been a fact of life in large developed economies for the past decade – and counting.

Up until late last year, most market participants – including investors and policymakers – believed the environment was temporary. There is a strong case to be made for interest rates remaining structurally lower for a longer period of time.

In our Part II whitepaper, we consider the consequences of such a protracted low-rate environment on asset prices – in particular on equity prices.

We believe the equity market offers investors attractive risk-adjusted returns on average. We also deduce that equity risk is being priced differently between certain geographies and sectors.

In Part I we considered the likely drivers of low interest rates and explored the case of Japan and the lessons that can be taken from their economy. If you would like to review the first part of this two-part Whitepaper series, please access this here: Part I: Low Rates, Assets Inflate