Valuation update

We start the week with our regular look at global equity valuations. The message remains broadly unchanged: US large caps continue to trade at elevated levels, both versus their own long-term history and compared to the rest of the world. What is noteworthy is that even when excluding the US tech sector, valuations for US large caps remain high on a simple price-to-earnings basis.

Other regions also trade above their 20-year averages, but their current valuation levels look far more reasonable — even if they have historically traded at a discount to the US. Once again, valuations alone are a poor timing tool. However, as long-term investors convinced that the entry price is a decisive driver of long-term returns, we remain selective when deploying new capital.