MLC urges investors to get out of cash

MLC has urged investors to apply more sophisticated investment strategies and think beyond simple income-based approaches such as cash, bonds and term deposits.

The call was initiated by MLC investment strategist Michael Karagianis, who said it was very unlikely that cash and bond investments alone would continue to generate high returns in the future.

These comments also come after National Australia Bank's (NAB's) Term Deposits generated around $400 million in funds under administration, months after being added to MLC's MasterKey Fundamentals investment platform.

Cash products have been a popular investment ever since 2008, due to the continuing market volatility.

The share market was down approximately 11 per cent last year, whereas term deposits and bonds delivered around 6 per cent and 10 per cent respectively.

However, Karagianis said interest rate cuts by the Reserve Bank have reduced term deposit rates below 6 per cent and bond yields declined significantly over the past year.

"It is important that investors branch out and blend a range of more sophisticated investment strategies in order to obtain sustainable returns while actively managing capital risk," he added. "By failing to do so, investors risk returns from simple income strategies not delivering enough to sustain retirement savings."

What investors should consider, however, is to increase their exposure to credit within their income-based strategy, according to Karagianis.

"Overall, they need to invest in a highly diversified credit portfolio and to continue to actively manage that risk over a full investment cycle," he said.