Australian market outlook less rosy
Investors should expect a less rosy picture in the Australian equity market due to subdued economic growth leading to earning risk, according to Bennelong Funds Management.
Despite the ongoing geopolitical risks, the outlook for the global macro environment remained strong, with the US backed by Trump’s stimulus and the Eurozone economies beginning to recover.
However, this was not the case in Australia, according to Bennelong Australian Equity Partners’ (BAEP) investment director, Julian Beaumont.
“We remain stock-specific and focused on lower-risk propositions with more predictable and underappreciated longer term value creation,” he said.
“For investors in the Australian equity market, the best opportunities are beyond the big banks, resources and slow-growth yield stocks.”
4D Infrastructure’s global equity strategist, Greg Goodsell, said that with the post Global Financial Crisis (GFC) stagnation coming to an end and inflation re-emerging around the world and interest rates rising, the major economies showed positive signs.
He stressed that China was gaining momentum driven by a shift to a domestic driven consumption economy.
Goodsell also said that while Latin America was in slow recovery and Japan started to grow for the first time in a long time, India was powering ahead.
At the same time, the current low levels of volatility should not be taken for granted by investors.
Wheelhouse Investment Partners’ portfolio manager, Alastair Macleod, said: “It has been a period of surprisingly low volatility, but investors shouldn’t assume this is going to continue”.
“They need to position their portfolios to manage risk as effectively as possible, particularly as they approach retirement.”
He went on to say that tail-risk hedging represented immense value for investors, in terms of improving outcomes, and it made sense to factor in this element in portfolio construction, in particular in portfolios targeting retirees.
“The tail risk doesn’t harm time-weighted returns; it is only harmful when investors need to live off their savings and redeem during these periods,” Macleod said.
“Retirees can be the most acutely affected because of their outsized reliance on their investments to fund living expenses – their necessity to draw down on a monthly/quarterly basis.”
AUTHOR
Oksana Patron
Recommended for you
Retailisation of private markets such as evergreen funds may seem like appealing options for wholesale and retail investors, but providers risk undermining trust if their products are unclear.
Ethical investment manager Australian Ethical has seen its funds under management rise by a third over FY25 to close out the year at $13.9 billion.
BlackRock Australia’s head of intermediary distribution James Waterworth has taken up a new distribution role at an alternative asset manager, while Antipodes has hired a distribution director.
BlackRock’s iShares ETFs have reported a record first half for inflows, gaining US$192 billion in the past six months, to see overall ETF assets under management rise to US$4.7 trillion as it launches its first active ETF in Australia.
