POWERED BY MOMENTUM MEDIA
Hunt for yield will continue, says Fidelity
Fidelity head of Australian equities Paul Taylor said the hunt for yield would continue in 2013 due to a slower growth environment that would remain for at least five years.
He said the current market recovery was starting to resemble those that followed the 1987 crash and the mid-1970s oil price shock where after five years the market picked up again.
Taylor said he expected the Australian share market to deliver similar positive returns in 2013 as in 2012 - close to a 20 per cent total return.
He said a lot of bad news had been factored into Australian share prices, which made market valuations for medium- and long-term investors attractive.
"As cash rates and term deposits continue to decline, the significant dividend yield of the Australian equity markets looks increasingly appealing to investors seeking income returns," he said.
Strong corporate balance sheets and free cash flows also equated to sustainable dividend yields, Taylor said.
"Buying bank shares with attractive dividend yields and franking credits is still a superior risk return investment than putting your money in that bank's term deposits - even in a lower growth environment," he said.
Taylor said only the strongest business cases would attract new equity as investors demanded higher dividends, capital returns and share buybacks in 2013.
AUTHOR
Staff Writer
Money Management staff writers are writers who contribute to the website from time to time. If you would like to discuss the content contained within this article please contact us.
Recommended for you
Despite tariff challenges and a weaker US dollar, the investment manager remains optimistic that Asian markets, both big and small, stand to benefit.
The uncertainty surrounding US trade policy is weighing down global growth prospects, KPMG warns.
The US and Europe trade deal represents a significant step forward in resolving trade conflict, but markets have largely priced in the good news already, says the asset manager.
The Australian sharemarket is back to overvalued following the sharp rally since April, but many sectors still offer attractive stocks, according to the research firm.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
88.01 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
72.60 3 y p.a(%)
3
Global X GlobalX FANG+ ETF
44.46 3 y p.a(%)
4
Pengana High Conviction Equities B
39.12 3 y p.a(%)
5
Pengana High Conviction Equities A
39.05 3 y p.a(%)
