Aussie equities and mortgages tipped to shine
Analysts are predicting that losses are imminent for fixed interest markets, while Australian equities bull markets will continue unabated for years to come.
And according to insurance and financial planning firm Australian Unity, the mortgage sector will be capable of delivering solid returns coupled with a greater focus on risk following the Westpoint collapse.
Australian Unity business partner, Vianova Asset Management chief investment officer Michael Schneider said investor confidence in fixed interest markets remained strong and “not easily shaken” after a 25-year bull market in the sector.
However, he warned: “The probability of negative or at least flat returns is very high.”
Schneider said current market conditions were disrupting the “tailwinds” that had been driving returns for the sector.
He cited synchronised growth in Japan, Europe and the United States, and economic recovery in Japan that could encourage Japanese investors to keep their money “at home”, as factors that could contribute to destabilising fixed interest markets.
“We think there are enough structural reasons to be alert to losses soon,” Schneider said at an Australian Unity market briefing yesterday.
At the same briefing, Platypus Asset Management chief investment officer Don Williams said performance in Australian equities markets was being driven by company earnings and mergers and acquisitions.
He said the market had displayed essentially no volatility and corrections had been “frustratingly shallow”.
“We think it is a high quality bull market … and there are years, not months to run,” he said.
Williams said a larger correction was “inevitable and desirable” in the short to medium term, but investors should not confuse such a correction with the end of the bull market.
Australian Unity Investments head of mortgages Roy Prasad said the outlook for the mortgage sector was also positive.
Prasad said he expected to see increased mortgage origination through diversification and a reduction in liquidity with higher returns for investors.
He said the Westpoint collapse had refocused the industry on credit quality and disclosure of risks to make investors better aware of the source of yield.
Recommended for you
Lonsec and SQM Research have highlighted manager selection as a crucial risk for financial advisers when it comes to private market investments, particularly due to the clear performance dispersion.
Macquarie Asset Management has indicated its desire to commit the fast-growing wealth business in Australia by divesting part of its public investment business to Japanese investment bank Nomura.
Australia’s “sophisticated” financial services industry is a magnet for offshore fund managers, according to a global firm.
The latest Morningstar asset manager survey believes ETF providers are likely to retain the market share they have gained from active managers.
