More modest returns expected
Paul Taylor
Australian investors need to lower their expectations with respect to returns from Australian equities, according to the latest analysis released by funds management group, Fidelity.
Fidelity Australian Equities Fund portfolio manager Paul Taylor said that while the outlook for the Australian stock market was for solid earnings growth with good dividend yields, investors needed to revise their expectations.
He said investors would need to set their expectations closer to the Australian stock market’s long-term average nominal return of around 12 per cent, rather than the 20 per cent plus returns delivered in recent years.
“I expect the macro-economic environment will remain strong, even if interest rates continue to rise,” Taylor said.
“Unemployment is low. We have tax cuts coming through. Spending on infrastructure is rising. High commodity prices are likely to support mining stocks.”
He said that stock specific factors would be of more importance this year because more would depend on the ability of companies to manage the cost pressures.
AUTHOR
Mike Taylor
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