Advisers optimistic about share market

Advisers are more optimistic than investors that the share market will improve in the next six months and are also likely to allocate twice as much to international equities, the latestAustralian Investors’ Association(AIA) and Adviser Ratings sentiment indices have revealed.

The AIA Index of Investor Sentiment and the Index of Financial Adviser Sentiment, both released this month, record the attitudes of investors and financial advisers on share market movements in the next six months as well as asset allocation views.

The majority of advisers, 49 per cent, believe the next months will hold a bullish market compared to 30 per cent of investors, while 21 per cent of investors and only five per cent of advisers believe the next six months will see the continuation of a bear market.

According to the AIA and Adviser Ratings, the reasons for advisers favouring a bear market could be because they are privy to more frequent and current information from fund managers, their longer term view due to collective experience and knowledge of share markets and the fact that it is not their money.

Advisers and investors were in agreement on a neutral market view, with the majority of investors, 49 per cent, and 46 per cent of advisers with this outlook.

Investors’ love affair with Australian equities and property was highlighted in the asset allocation sentiment indices, with 38 per cent and 24 per cent of investors registering their interest respectively. Advisers were not too far behind in Australian equities, with 33 per cent, but were substantially lower on property with 16 per cent.

According to the AIA and Adviser Ratings the variation in property sector allocation between investors and advisers could be due not only to the traditional fondness of Australian investors for property investment but also because of the minimal number of property related managed funds investments available for advisers to recommend.

International equities was easily the next most favoured by advisers, with 22 per cent compared with 12 per cent of investors, while figures for cash and fixed interest revealed a similar sentiment of the two groups. Cash was slightly more favoured by investors than advisers (14 per cent compared with 11 per cent) and fixed interest went the other way with 17 per cent of advisers compared to 13 per cent of investors.

The AIA Index of Investor Sentiment is based on information from the group’s membership of individual investors while the Index of Financial Adviser Sentiment is collected through a survey of financial advisers by Adviser Ratings.