Russell data reflects mixed signals
Australian large cap equities have outperformed Australian fixed income investments to the tune of 23 per cent on a total return basis over the past 12 months, according to the latest data from Russell Investments.
The data, contained in the company’s fourth quarter Strategist Outlook and Barometer Report, pointed to a mixed outlook for Australia.
According to Russell Investments’ senior investment strategist for Asia-Pacific, Graham Harman, the pattern of large cap equities outperforming fixed income was expected to hold over the next 12 months, albeit at declining strength, “as lackluster conditions and mixed economic signals affect Australian markets”.
“We expect the low interest rates driving house prices to be balanced by a slowing domestic economy in the wake of a resource-sector boom,” he said.
The report also showed European equities were favoured over US equities, while emerging market equities look increasingly more positive, possibly offering double-digit earnings growth in 2014.
The global head of investment strategy at Russell Investments, Andrew Pease, said the forecast is for synchronised growth across the US, Japan and Europe for the first time since 2010.
“Looking ahead to 2014, we expect to see a strengthening low-inflation recovery that favours equities over bonds, despite relatively full equity market valuations,” Harman said.
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