Despite equity indexes sitting at all-time highs, GMO sees a highly attractive asset allocation environment, underpinned by cheap absolute valuations and historically wide valuation spreads. They argue that this creates the best relative and absolute return potential in over three decades.
Record Highs…But We’re Still Excited
GMO
Research
2 Pages
Key Takeaways
Deep value dislocations: The cheapest 20% of global equity markets are trading at 3rd and 5th percentile discounts versus history, offering extreme value opportunities
Broad asset appeal: Forecasted real returns across equities, bonds, credit, and alternatives are among the highest GMO has seen, especially under low-rate scenarios
Non-U.S. edge: International equities look undervalued compared to the U.S., and weak foreign currencies offer an additional performance tailwind
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