Lonsec looks at global shares
Lonsec has shifted its strategic asset allocation weights for traditional balanced risk profile, with the majority of the recommended equity allocation now tilted towards global shares.
In its "Strategic Asset Allocation Review", the company revised down its long-term expected returns across most asset classes.
Lonsec Investment Solutions chief investment officer, Lukasz de Pourbaix, said that given the current outlook, a higher global allocation was appropriate and that investors should look abroad to maximise the benefits from diversification.
"Australian equities represent only a very small part of the global equity market capitalisation and are predominantly concentrated in the financials, energy and materials sectors," he said.
"The main drivers of this decision were the reduced risk and return benefit offered by domestic shares relative to global shares, as well as the diversification benefits achievable through a global allocation."
At the same time, across Lonsec's non-traditional risk profiles, including alternative assets, increases were made in global fixed interest and diversified income weights across the defensive and conservative risk profiles, funded by reductions in conservative and alternative assets.
"The main benefit of alternative assets is they tend to have a lower correlation with traditional asset classes. But investors need to ensure that they are using the right alternative strategies for their investment objectives,"
"Given the current outlook, we felt a slightly lower allocation to conservative alternative assets was appropriate for the defensive and conservative risk profile," de Pourbaix said.
AUTHOR
Oksana Patron
Recommended for you
Some 42 per cent of CEOs say they are actively reinventing their business to stay relevant in the next decade, with consumer services the most common choice for asset and wealth managers.
Former Ophir Asset Management chief executive, George Chirakis, has joined private equity manager Scarcity Partners, while the asset manager has appointed a replacement from Macquarie.
Australian Unity has appointed a fund manager for its Healthcare Property Trust, joining from Centuria Healthcare, as it restructures the product with a series of senior appointments.
Financial advisers nervous about the liquidity of private markets funds for their retail clients are the target of fund managers launching semi-liquid products which offer greater flexibility and redemptions.
