The investment house is bearish about resource stocks given China's ability to sustain its growth.
Investors should be cautious when investing in resource stocks as China's growth may not be sustainable, according to Schroders head of Australian equities Martin Conlon.
"Just as no-one really considered the risk of Tiger Woods being an off-course philanderer, very few are considering the risks to Chinese growth and the likely implications of a sharp slowdown," Conlon said.
He said the sustainability of China's growth will be affected by the country's reliance on fixed investment together with an "increasingly dubious quality of investment".
If China was to continue to grow, Conlon said it should eventually move into more consumer-orientated industries that would no longer require a huge demand for resources.
China's huge population also does not necessarily translate into higher productivity or domestic consumption given the relative poverty of most of its people.
"Africa has a huge population but investment is not exactly high nor is the wealth of the population," Conlon said.
The investment firm favours industrial stocks in its Australian equities portfolio and Australian companies that derive their earnings offshore, such as Brambles and News Corporation.
Technology is also a favoured sector.
"The government's intergenerational report has highlighted that Australia faces huge healthcare costs. Technology companies will play a pivotal role in addressing that kind of challenge," Conlon said.
Conlon also said Axa Asia Pacific will be a better fit for AMP.
"Axa's business is more than wealth management. The business also has a big insurance business, which is more of a natural fit for AMP," he said.
"National Australia Bank's bid was too high. On the other side of the equation, the board of Axa Asia Pacific deserves a commendation for actually focusing on the interests of their shareholders."
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