Home investment bias flattening wealth
Australian investors' home country bias and fixation on yield may be responsible for diminishing their wealth in the short term, according to PM Capital.
Despite the US S&P500 performing seven per cent per annum better than Australia's All Ordinaries index over the five years to January 2014, investors are wrongly unwilling to tap into the market due to concerns about its performance over a 10-15 year period, PM Capital head of distribution, Rob Thompson, said.
"There are very clear diversification benefits and compelling valuation opportunities available off-shore for Australian investors," he said.
"There may also be an opportunity to minimise the risk of another yield trap."
Thompson felt the focus on yield was leading Australian investors astray and instead, they should be focused on the risk/reward proposition.
"The reality is that the strong focus on yield is distorting asset prices," he said.
"On many occasions the elements of yield are overvalued or receive too much focus at the expense of other important fundamentals that deserve greater consideration," he added.
AUTHOR
Staff Writer
Recommended for you
As ASIC chair Joe Longo pushes firms to prepare for the upcoming mandatory climate disclosure regime, what skills are necessary if firms are looking to expand their ESG teams?
First Sentier Investors has announced it will close four of its Australian investment teams amid a simplification of the business, with $14 billion expected to be returned to investors.
Over 90 finalists have been chosen to compete at the 36th annual Fund Manager of the Year Awards, to be held in Sydney on 13 June.
Clients may be asking their adviser whether there is still value in the US technology names after their rally, but Fidelity International’s Lukasz de Pourbaix believes they can still offer upside.
