Global equities hold surprises for savvy investors
Australians are highly allocated to local equities and need to re-evaluate the opportunities that exist on the global market.
Threadneedle chief investment officer Mark Burgess described the current macro economic backdrop as 'awful', spurred on by record levels of debt and 'anaemic' growth.
Despite this, low interest rates over the medium term mean high yield assets are performing well amid the ongoing Eurozone crisis, the US fiscal cliff and a slowdown in China's economic growth, he said.
"If investors want to get a good return, they're going to have to look outside of core bond markets," Burgess said.
Over rolling three-year periods, equity income strategies have outperformed every year during the last 20 years, according to SG Cross Asset Research.
Other than sectors like financials and industrials, there are limited equity income opportunities in Australia when compared to the rest of the world, Threadneedle head of global equities William Davies said.
From an institutional perspective, superannuation funds will also need to take a more global approach to equity investing, Threadneedle Australia head of distribution David Chinnery added.
"The theme we've seen over the past four to five years has been a greater allocation offshore," he said.
"Over allocation to Australian equities will most likely cease in favour of the more holistic approach to equities," Chinnery said.
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