Switch to global equities, says Threadneedle
With Australian interest rates likely to continue falling, investors should consider reallocating out of cash and into global equities, according to Threadneedle head of Australian distribution, David Chinnery.
"[Global equity] yields are competitive relative to cash, and valuation models suggest that stocks are cheap," he said.
Threadneedle head of global equities William Davies said well managed companies around the world have access to cheap debt.
"This means a lower cost of capital and a lower hurdle rate for new investments," Davies said.
He pointed to three thematics that are driving Threadneedle's current stock selection.
Firstly, the rise of the consumer class in emerging markets is creating opportunities for global brands such as Swatch, Davies said.
Secondly, shifts in the supply of gas and rising demand from Asian countries is benefiting British Gas Group, LyondellBasell and Dresser-Rand, he said.
Finally, product innovation is driving growth for companies such as Apple and eBay, Davies added.
"It's worth remembering we invest in companies - not economies or countries. Despite the challenging economic backdrop, there are strong companies with competitive franchises to be found and diligent stock-pickers will reap the rewards," Davies said.
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