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The most frustrated investors these days have to be the ones who believe in the foundational "buy low" theory of building wealth.

Buy low? Does any asset class qualify as under-valued these days? If you go by the semi-annual economic and market review from portfolio managers PWL Capital, the answer is yes. Rate reset preferred shares and emerging markets are rated as cheap by PWL. Almost everything else is described as expensive.

All the prominent fixed income categories get the expensive rating – from three month Treasury Bills to short-, medium- and long-term government and investment-grade corporate bonds. Wondering if the Canadian stock market might still be a bargain, given its medium-term underperformance against U.S. and global markets? Nope. PWL rated the S&P/TSX 60 index of big blue chip stocks as expensive. The S&P 500 was described similarly.

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The leaders among pricey assets are 30-year Canada bonds, which PWL estimated as being 24.3 per cent over-valued. U.S. stocks were pegged at a 20 per cent over-valuation, while Canadian real return bonds were over-valued by 15.6 per cent. A note to those who think U.S. stocks are primed for a correction: PWL points out that the U.S. market was roughly 50 per cent over-valued in early 2000. By comparison, PWL pegged the Canadian market as being just 5 per cent over-valued in late 2017.

Fairly priced assets include perpetual preferred shares , which have no ability to adjust to changes in interest rates and are kind of like bonds without a maturity date. U.S. real estate investment trusts are also on the list, as are the MSCI Europe and Pacific indexes.

Rate reset preferred shares – they differ from perpetuals in having their dividend rate reset every five years to adjust to changes in interest rates – were described as being 3.1-per-cent under-valued. Emerging markets were under-valued by 5.6 per cent. "In spite of its good recent performance, [emerging market] equity remains the most affordable equity asset class we cover," the PWL review says.

As ever, exchange-traded funds are a precision tool for investing in a specific asset class like rate reset preferreds and emerging markets. Most ETF companies have an EM fund, while pretty much all preferred share ETFs will have a dominant weighing in rate resets.

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