In the context of increasing market volatility and low returns, Findex argues that it is critical for investors to implement a balanced investment strategy.
Findex chief investment officer Kieran Canavan said when faced with low yields and high volatility, a balanced investment approach is necessary.
“This includes determining the appropriate mix of growth and defensive assets and altering the mix or composition of these assets both on a strategic (five-year) forward looking and on a tactical (three-month) forward looking basis,” Mr Canavan said.
Investors also need to manage risks through effective portfolio construction, he added. He pointed out that his firm’s investment strategy is based on six “pillars”: asset allocation, Australian equities, international equities, fixed income, alternative investments and portfolio construction.
Findex's head of investment research, Stefano Cavaglia, noted that in today's context, Australian investors need to look beyond domestic assets.
“In the current environment, Australian investors must note that their domestic equity portfolios are highly concentrated; international equities provide a wide range of growth opportunities,” Mr Cavaglia said.
Moreover, “given the lower return world, we must seek new drivers of performance that can be captured via alternative investments”.
Property and infrastructure investments provide a “resilient yield”, making them a valuable investment in turbulent markets, he added.