Exposure rates of the Dorval Asset Management Range – 30th December 2021

2021 is drawing to a close on a very upbeat note on the stock-markets, despite the series of Covid-19 variants, inflationary tension and the beginnings of monetary and fiscal policy normalization.

This upswing on the equity markets can be attributed to the forceful pace of the economic recovery, with expected growth of 5.8% after a severe 3.1% contraction in 2020.

 

Against this backdrop, earnings from companies on the MSCI World have soared by close to 50%, bolstered by the upturn in demand. Valuations have gradually shrunk after posting lofty price/earnings ratios at the start of the year, giving rise to possible opportunities for the year ahead.

 

Price/earnings ratios on the main international markets

 

 

The equity risk premium remains comfortable in comparison to bond assets. However, with the clear exception of emerging markets (MXEF index), valuations point to a degree of maturity for the stock-market cycle and with this in mind, we take a relatively cautious stance on our asset allocation.

 

We expect the economic boom to persist, despite rising inflation, although we will keep a very close eye on monetary moves. If policy becomes more restrictive with a focus on curbing inflation, a more defensive stance would be warranted.

 

All our team here at Dorval Asset Management would like to wish you a very happy new year: thank you for placing you trust in us throughout 2021. Tune in next week to kick off 2022 with the first in another series of 52 publications!

 

 

Download the weekly letter in PDF version: Exposure rates of the Dorval Asset Management Range – 30th December 2021

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