Australian equities to see poor sectors rebound
The chief investment officer of an Australian equities fund manager believes investors this year will reap solid returns from market sectors that have performed poorly over the past 12 months.
Similarly, Platypus founder Donald Williams feels the sectors that produced good returns in 2006 will be the ones for investors to underweight in portfolios this year.
“The most obvious sector to underweight is retail. Twelve months ago you couldn’t give away a retail stock and now they’re more expensive. One of the key things we’re trying to figure out is when do you reduce the weight in these stocks and it’s probably a bit early at the moment,” he said.
In regard to the rebounding stocks, he predicted commodities to be the best sector and said Platypus was basically focusing on three stocks in this area: BHP Billiton, Rio Tinto, and Woodside Petroleum.
One trend he observed that he did not like was the response from the share market to the latest financial reporting season.
“We’re never comfortable with the market rallying strongly in terms of the reporting season. It sets up a situation where the expectations are so high individual companies have to produce exceptional results for the share price to respond positively,” Williams explained.
As such he predicted there will be a couple of market corrections throughout the year with one likely to coincide with the end of the reporting season.
“Overall, we do think there will be double digit returns from the equity market this year,” Williams concluded.
Recommended for you
AUSIEX has announced it will acquire FIIG, a specialist fixed income provider with $4.5 billion in funds under advice.
Platinum Asset Management has announced it is in discussions with a global alternatives fund manager regarding a possible merger to create an $18 billion firm.
Frontier Advisors has bolstered its Japanese footprint through a partnership with the $350 billion asset management arm of Nippon Life Insurance Company.
JP Morgan Asset Management has appointed an ETF specialist from Vanguard as it seeks to expand its ETF range.
