Big guns take more investment risk

Published in The, May 2012 by Karina Barrymore

A new survey of global fund managers shows a strong shift in sentiment by the big guns in favour of more risky assets. 

'The survey offers a rare insight for "mum and dad" investors to see what strategies the professionals and large institutions have for the year ahead.

And defensive, low-risk assets look set to be ditched as the big managers look for higher returns from riskier investments. 

China, they say, is expected to continue to boost the fortunes of Australian companies and our economy, leading the way for more confidence in their investment.

The Russell Investments quarterly survey of 40 international investment managers found the managers had turned off conservative assets such as Australian bonds and defensive shares in consumer staples, telecoms and healthcare.

Instead they are buying more growth shares such as materials and energy stocks as well as listed property trusts.

"This quarter, managers' risk appetite visibly increased," Russell director Greg Liddell says. 

"This has been spurred along by relatively low yields on Australian bonds and attractive valuations on Australian equities - which 64 per cent of managers still believe are undervalued."

The survey also found that China was the most important influence the managers factor into their 2012 investment portfolios, followed by the Australian dollar, European debt funding and interest rates.

Wealth Within analyst Dale Gillham says the survey offered an insight in to the strategies of big investors.

"There is an old saying that the professionals buy at the bottom and sell at the top - and that the amateurs buy at the top and sell at the bottom," Gillham says.

"Big investors are just that, big and therefore are very slow to move in and out of an asset class. 

“Given, this, mum and dad have a huge advantage over the big investors as they can move quickly in and out of shares or cash."

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