Implemented Portfolios’ IMAs underweight international equities and property

Implemented Portfolios has an underweight allocation to international equities and property due to a subdued 10-year outlook for economic growth and uncertainty across developed countries, as well as indications of a slowdown in China.

The portfolio construction and investment manager’s asset allocation and investment committee, which makes decisions for the firm’s individually managed accounts, announced a preference for income securities and cash in light of continuing fiscal problems in Europe and debt burdens in Europe, the UK and the US.

Implemented Portfolios stated that it was cautious of slow economic growth over the next 10 years, defensively positioning its five model investment portfolios with heavy weightings to income securities, with an aim of broadening the range of investments within the asset class.

Its investment committee noted the increase of allocations to Australian equities, which was attributed to the resilience of the Australian economy throughout the global financial crisis.

“Compared to international equities, Aussie equities are a much better picture, we think earnings can grow at an average of around 3.6 per cent per year for the next 10 years, which is modest but reasonable, and also Australia just doesn’t have the fiscal problems of the rest of the world,” said committee member, Tim Farrelly. “Our big problem will be if we get dragged down by the global mire because low growth in the rest of the world can impact on us.”

The committee stated that one of the main contributors to underperformance of Australian equities compared with international equities in the first six months of 2010 was the Government’s poor management of the resources tax.

Where there was an allocation to international equities, there was a preference for emerging markets, including Asia and Latin America, the committee stated.