Volatility presents time to rebalance portfolios: Pendal
While bargains aren’t as obvious as in March 2020, there are still opportunities, according to Pendal.
Pendal head of multi-asset investment, Michael Blayney, said the current state of market volatility was a normal part of the investment cycle. Australia was also faring better than other global markets and was more reasonably valued.
“While there are clearly a lot of headwinds to equities at present, Australia is fortunate that the local market is more reasonably valued than many offshore markets. Also, the resources weighting of the ASX helps provide a partial hedge against inflation.”
Panicking during a market downturn or after a large stock fall was a ‘wealth-destroying’ activity and a globally-diversified portfolio tended to be a sound strategy for long-term wealth.
He suggested this was a good time for investors to rebalance portfolios, trim assets after strong price increases and top up after falls.
“We’re not at the point, yet, of seeing ‘bargains’ like March 2020 or late 2008, the market falls have led to lower valuations across a range of asset classes.
“In the present environment, this would naturally lead investors to trim cash and alternatives and top up cheaper equity and bond holdings.”
Pendal had an underweight allocation to bonds and equities but said these were “modest allocations” in the wider asset allocation.
AUTHOR
Laura Dew
Recommended for you
Former BT sales executive, Sarah Hegarty, has taken up the role of senior director of wholesale distribution at HMC Capital.
The Reserve Bank of Australia has announced its final interest rate decision for 2024 amid stubborn inflation and faltering economic growth.
Financial advisers are demonstrating interest in smart beta ETFs, according to VanEck, who are using it as an alternative to active management.
The deal between Perpetual and KKR is in doubt after the ATO significantly reduced the estimated cash proceeds for shareholders due to a $488 million primary tax liability.
