Fidelity positive on Aussie equities
Now could be a good time to buy Australian equities due to a relatively low price-to-earnings ratio (PE) and attractive dividend yields, according to Fidelity Investment Management.
The historically low 12 times PE and dividend yields of 4-5 per cent combined with strong balance sheets and large cash reserves mean some companies are trading cheaply and present an exciting opportunity, according to Fidelity head of Australian equities Paul Taylor.
There remained some concerns over European sovereign debt but Australia would likely a continuing two-speed economy with a strong resources sector, negative impacts of the strong Australian dollar and higher interest rates, Taylor said.
Key sectors to overweight would be industrials, healthcare, materials and energy, he said. Overall market valuations had decreased based on macro fears, which created stock-picking opportunities to access high-quality, high-growth companies at cheap valuations, he said.
Taylor preferred large-cap mining stocks to small-cap miners, and he said Australian banks were a good investment due to dividend yields.
Key risks in the next 12 months for the Australian market include rising interest rates, which could pressure the consumer discretionary sector; and slowing Chinese growth, which could impact commodities. A destabilising macro environment due to issues in Portugal and Spain could hang over the market for the rest of 2011, he added.
Recommended for you
Former Platinum co-founder James Simpson will take up a non-executive role at Income Asset Management as two directors retire.
Bell Financial Group has announced a 44 per cent decline in half-year net profit after tax but record funds under advice as it transitions into a diverse wealth management business.
Having predicted three ETF trends for Australia at the start of this year, State Street has shared how these are tracking and whether Australia will successfully reach US$30 billion ETF inflows for 2025.
Magellan fund manager Nikki Thomas is to depart next month as the firm reviews its range of global equity funds and transitions her High Conviction fund.
