Fed comments on valuation fall flat with fund managers

US Federal Reserve chair Janet Yellen may have surprised the markets this week by noting that valuations in some parts of the US stock market look stretched but mutual fund managers mostly greeted her comments with a shrug.

Social media, small company and biotech stocks fell broadly on Tuesday after the Fed noted that forward price/earnings (PE) multiples in those sectors appear “high relative to historical norms”. It was the first time in 14 years that the US central bank had made specific comments on the valuations on a particular equity sector.