Advisers need to be 'realistic' about investment strategies
Advisers need to be “realistic” about the expectations of investment strategies, according to AXA chief investment officer Mark Dutton.
Speaking at an AXA luncheon, Dutton said while investor confidence has dropped during the global financial crisis, there’s no doubt investors are better off following the “basic foundation principals” that encompass diversification, research and active management.
“The way to think about all of these things is not certainty, it is about biasing the odds in our favour,” Dutton said.
Dutton said the most basic and effective portfolio strategy is diversifying between equities and fixed interest.
“The basic split … is the biggest, most effective diversifier in the entire suite of diversifying opportunities in the market,” Dutton said.
According to Dutton, international versus Australian equities as a diversifier is also “surprisingly good over the long term”.
Meanwhile, Dutton believes distorted markets have created significant opportunities for active managers.
He said value and growth opportunities are among the highest on record.
“This is the first time now for coming close to 30 years when there has been a strong opportunity for both growth stocks and value stocks,” Dutton said.
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