Value found outside blue chips
Zenith's Approved Product List (APL) has outperformed the index as the stock selection with less exposure to "blue chips" stocks has paid off, according to a Zenith study.
The 2016 Australian Large Companies Sector Review showed that the managers on Zenith's APL had outperformed by 3.6 per cent relative to the S&P/ASX 300 Accumulation index.
Senior investment analyst, Quan Nguyen, said that on average, funds on the APL had returned 1.5 per cent, net of fees for the 12 months ending 31 May 2016.
"The key driver of outperformance for Zenith's rated active funds has been stock selection. In particular, the stock selection driven decline exposure to blue chips stocks (the S&P/ASX20 index) has been a trend that has paid off,"
He also noted that the blue chip/top 20 index was dominated by Australian bank stocks, and this had been one of the hardest hit segments of the market over the last 12 months.
"For some time, Australian blue chip stocks have been among the highest yielding segments of the market. The reversal in relative performance of blue chips has definitely made investors question whether the yield trade is over," he added.
According to Zenith, despite the spread between the Reserve Bank of Australia cash rate and the market, dividend yield would remain relatively wide, while high and stable dividend paying securities would remain attractive to investors.
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