PIS recommends age-old strategy
Robbie Bennetts
As Australia’s stock market continues to fluctuate, financial advisers should include dollar cost averaging in their clients’ investment portfolios, according to Professional Investment Services chief executive Robbie Bennetts.
Dollar cost averaging involves the purchase of securities in fixed dollar amounts at regular intervals on the belief that the average value of the investment will increase over time.
Bennetts claims this strategy would offset market volatility as funds are invested over a set time period rather than in a lump sum.
“With the number of changes occurring in investment products, the increasing complicity of product structuring and the constantly changing playing field of financial planning strategy, dollar cost averaging into volatile markets makes sense, rather than trying to market time the peaks and troughs,” Bennetts said.
“Recent stock market activity proves how hard it is for experts to predict which way the market will turn, let alone individual investors.”
Bennetts added that self-managed superannuation fund investors could also benefit from the investment strategy.
“Dollar cost averaging is also a viable strategy for all those self-managed superannuation funds that are currently flush with cash waiting to be invested following the unprecedented levels of inflows that occurred prior to June 30 as investors topped up their super to take advantage of the significant tax incentives arising from the Government’s ‘simpler super’ reforms.”
Recommended for you
ASIC’s enforcement action is having an active start to the new financial year, banning a former Queensland financial adviser for 10 years in relation to fees for no service conduct.
ASIC has confirmed the industry funding levy for the 2024–25 financial year, and how much licensees can expect to pay.
Australian licensees are expected to make greater use of custom model portfolios for their clients, according to State Street Investment Management, following in the footsteps of US peers.
Adviser Ratings has argued that it’s time for more advisers to utilise digital engagement tools available to them as a disconnect grows between consumers seeking advice from finfluencers and from professionals.
