Domestic equities may have driven double digit superannuation returns in the current financial year but Australian investment managers are looking to international equities as the likely strongest performer in 2005-06, according to a survey conducted by Russell Investment Group.
The survey, published today, shows that nine out of ten managers surveyed believe the Australian equities market is currently “fairly valued” or “over-valued” reinforcing the need for investors to look offshore for returns.
The Russell research is based on feedback from more than 40 Australian-based investment managers and was conducted during the first half of June.
Commenting on the survey outcome, Russell’s chief investment officer, Asia Pacific, Peter Gunning said the research indicated that Australian small caps and listed property trusts would bear the brunt of shifting investor sentiment over the coming year.
“Sentiment has become most bearish at the small end of the market which has outperformed its large capitalisation counterpart for the past three years,” he said.
Gunning said that the listed property trust sector had also been a darling of investors over the last few years but now appeared to have lost much of its appeal with more than two-thirds of mangers now bearish on the sector.
He said that on the basis of the survey, those investors who believed in the validity of investment managers’ perspectives might consider shaking off their affection for domestic asset classes such as Australian equities and listed property trusts and rebalancing their portfolios to international asset classes.
