Irrational risk aversion exacerbating market downturn: Schroders
The current level of risk aversion by Australian investors could be exacerbating the equities market downturn, according to Schroders head of Australian equities Martin Conlon.
“At the moment, people only want to buy defensive stocks, most of which are 10 or 20 per cent off their highs, and yet everyone thinks these are the safe areas of the market,” he said.
“Alternatively, they are buying non-productive assets, such as gold, out of fear rather than because they offer sensible returns.”
Conlon said that hoarding capital in gold (and defensive stocks) was the “worst possible” outcome for the market’s recovery.
“The market desperately needs capital to ensure the long-term viability of good (but cyclical) businesses,” he said.
He added that it is “ironic that it’s the prophets of doom on the economy who are investing in gold and exacerbating the market problem”.
“I don’t think that everyone investing in gold or hiding cash under the bed is likely to be a solution to our current economic woes.”
Recommended for you
Sequoia Financial Group has announced it is selling off its Informed Investor subsidiary which it acquired in April 2022.
Wealth Data has examined which advice business model has seen the most growth since the start of the year including those that offer holistic advice.
Research conducted by Elixir Consulting and Lonsec has quantified the efficiency gains of using managed accounts in financial advice practices in hours per week saved.
With only one-quarter of advice practices actively seeking feedback from clients, the Financial Advice Association Australia has emphasised why this is a critical tool for client retention.