European futures

Article Abstract:

Investors should be aware that the UK will inevitably be affected by European monetary union (EMU), even though the government has stated that it will not join EMU before the next election. EMU will lead to currency risks within Europe being eliminated, and it is likely that bond yields will remain within a relatively narrow range. It is expected that there will be higher rates of return on assets, lower tax rates and improved use of balance sheets to leverage returns. Investors across Europe will probably begin to establish portfolios that are more diversified geographically.

Administration of General Economic Programs, Intnl Economic Policy, International economic relations, European Monetary System

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Don't go overboard on equities

Article Abstract:

It is likely that gilts will continue to become more attractive in relation to other types of investment. Yields on gilts will probably return to around their level before the sharp rises in inflation of the 1970s, while their yield ratio will decline from its present level of around 2.0 to 1.5 or less. Michael Hughes, markets and strategy expert at Barclays Capital, believes that gilts will produce a total return of 8.5% a year in the period to 2008. Equities could continue to grow in value by 7% a year and produce a total return of 10.5% a year.

Personal Investing, Personal finance, Securities

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Equity investors should get set for the 6 per cent future

Article Abstract:

The double-digit returns achieved by equities in the 1980s and 1990s will probably not be sustained, according to the CSFB Gilt-Equity Study. Real returns are likely to yield around 6% a year, compared with the 12% to 13% enjoyed by investors until now.

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