Global sharemarkets have risen this year as major risks have eased

By Tim Farrelly – CEO of Farrelly’s, and asset allocation consultant to Australian Unity Personal Financial Services

Compared with a year ago the world economy is in much better shape; the US has slowly grown back to full employment, China continues to roar ahead and the European and Japanese economies have started to grow again.

All good news that should be, and is, comforting to investors.

As long-term investors we think about two main things: what sort of returns should we get from markets and what shocks or surprises could cause returns to be much lower than our expectations. Over the past year our expectations for future returns have moderated slightly as prices have risen, while our assessment of risk has fallen. We should still be fully invested.

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