Investment environment ‘complex and fragile’

Australian chief investment officers are only mildly optimistic about the performance of Australian and international investments over the next year, amid concerns about the slowdown of the American and European economies, according to the Financial Services Council’s (FSC) Chief Investment Officer Investment Index report.

The report revealed participants identified slower than expected economic recovery of the United States, further slowdown and possible default of European economies, and regulatory headwinds as significant risk factors.

FSC chief, John Brogden, said while they expressed some confidence about the Australian economy, chief investment officers’ concerns are placed largely around debt and deleveraging in Europe and the United States.

“Overall, [chief investment officers] describe the investment environment as complex and fragile,” Brogden added.

“Risk associated with Australia’s increasing reliance on Asia also emerged as a theme,” the report noted.

In terms of specific asset classes, Australian and international equities are expected to be the best performers over the next 12 months, while fixed income assets, both domestically and internationally, are not expected to perform as well as others.

Chief investment officers anticipate international property will perform better than Australian property.

The index noted “negative international factors weighed heavily on sentiment, despite general optimism about the Australian economy”.

The FSC Chief Investment Officer Investment Index is based on a survey of chief investment officers from a sample of the council’s members.

Participants included AMP Capital Investors, AXA Australia and BT Investment Management.