Inflation warning from Fisher

At a quarterly investment briefing in Auckland, Carmel Fisher, chief investment officer Mark Brighouse and David McLeish, the senior portfolio manager of fixed income, pointed to the over-supply of cash in the economy. They noted that slow growth in consumer spending meant interest rates stayed low and Governments were printing money but corporates and banks had more cash than they knew what to do with.

There were signs that investors were looking for riskier investments, they said.

Since the end of last year, $148 billion had been moved into equities, from bonds and cash. The March quarter was the best on record for developed markets’ equity funds, with bigger inflows in the quarter than bond funds for the first time since 2007.

But Fisher said despite a hot year, there was no danger of a bubble forming on the sharemarket yet, as investors had been so hesitant to invest since the global financial crisis. “We’ve got a long way to go.”