Australian investors continue to skew their asset allocations in search of yield, RBS Australia said.
The trend has been supported by the last two or three interest rate cuts, causing a market inflection point – and driving investors towards yield.
“We think, as people move from term deposits with the cash rate coming down – [and] even though [they are] moving into growth products and equities – they’re still looking at the yield component,” RBS Australia global banking and markets director Elizabeth Tian told InvestorDaily.
“People are still chasing yield and people are still chasing those franking-credit style income products,” she said.
Tian also notes there is still a strong focus from investors on cash allocations and since the rate cut in October, volumes have picked up further.
“What is going into equities is still really all about the yield stocks and all about the defensive stocks,” she said.
“I think this trend is only going to continue with cash rates coming down.”
The company also expects increased interest in the international equity space to continue, supported by the weakening Australian dollar and US market.
“Large broking firms have now branched out to not only local equities advice but international equities advice,” Tian added.
“So we’ve seen a pick-up in that and [to absorb that demand] we’ve got the products where you can trade international shares on the Australian Securities Exchange.”
