The Australian equity market remained unattractive for most investors at present as it had not generated capital growth for a significant period, a fund manager said.
Platypus Asset Management chief investment officer, Donald Williams, told an industry luncheon there had not been any earnings growth for some time, and predicted this would stretch into the next calendar year.
Williams also could not forsee a shift in performance until the Reserve Bank of Australia eased interest rates, adding that if companies were not making profits, they could not return anything other than a dividend.
"The yield is sort of pushing back over four per cent now. There's a reasonable yield, there's a reasonable starting point," Williams said.
Platypus attributed its positive performance to excluding many of mining stocks in its investments in light of the commodities bear market, with the firm "basically nude" on resources for much of the year, Williams said.
"We've managed to pick the eyes out of the initial public offering (IPO) market. The IPOs have generated quite a bit of performance for us at this time of the year," he said.
He said it was too early to re-enter the commodities market at this point, as commodity bear markets usually lasted three years.
"We've had a year. You'll get rallies in commodities occasionally and you'll get rallies in mining stocks and energy stocks as well but I think you need to be underweight for a little while there," Williams said.