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What Investments are Advisers Recommending Now?

Which investments are the professionals steering clients towards in the current market environment? And which assets are off limits?

Emma Wall 22 May, 2014 | 12:40AM

Investment returns will not be as high in the next three years as they have in the recent past – the rally's momentum is slowing.

But there are ways to make money, and profits to be had through asset selection. Whether investors chose active management, stock picking or smart beta to filter out the winners, the key is to be discerning.

“Returns will not be as high over the coming years, but they will deliver,” said JP Morgan’s Michael Barakos at the recent Morningstar Investment Conference.

“Valuation is the best indicator of whether you should buy something. Five years it felt like the world was falling apart, but valuations in European equities were so cheap that they were indicating years of outperformance – and that’s exactly what happened.”

“You need to get over the story telling, and focus on what valuations you are paying for that story,” he added.

Putting the ‘noise’ to one side was cited as one of the biggest challenges facing private investors today. Financial advisers attending the conference said that their clients were bombarded with information and determining the useful data was difficult.

Google chief economist Hal Varian said that in the age of the internet “data is widely available, what is scarce is the ability to extract wisdom from it.”

A recent research paper entitled Financial Well-being: The Last Taboo in the Workplace? commissioned by Barclays Corporate & Employer Solutions found greater education and workplace support is required to help consumers with their personal finances.

Barclays’ Katharine Photiou said: “Our research has shown that people - like computers - cannot function properly if they are loaded up with too many demands on their attention or bandwidth. When financial problems affect how employees think and operate, this can lead to a significant impact on their concentration and productivity in the workplace.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Emma Wall  is former Senior International Editor for Morningstar

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