So, everyone chases yield. The result is a rise in the price of income-generating assets – bonds, equities and property. The capital gain offers a welcome salve for the fact that income itself is harder to achieve. The question is whether the wealth effect the capital gain creates is seen as long term. The Life Cycle Hypothesis suggests that people only change their spending patterns if they believe their change in wealth is permanent. The economy might benefit, therefore, from asset prices holding current levels. It could give households the confidence to spend and provide the top-line revenue kick start that the corporate sector craves.
These views may differ from those of Henderson fund managers. The information should not be construed as investment advice. Before entering into an investment agreement please consult a professional investment adviser.