Investors should look beyond banks for yield

Investors should look beyond banks for yield

Australian investors need to seek bank stock substitutes when looking for growth or yield, says Australian Unity Investments.


In a note to investors, Australian Unity chief executive David Bryant said bank profits have been “soft”, and pressure on debt ratios and market growth were “expected to continue”, resulting in continuing uncertainty for investors.

“With such low interest rates there is also pressure on banks’ ability to maintain deposits and stem flows to equities and property, possibly putting further pressure on dividend policy,” he warned.

The statement came after the Commonwealth Bank recently revealed its cash net profit after tax had grown by 3 per cent in the 2015-16 financial year to $9.45 billion, which UBS Asset Management said was a “soft half” for the bank.

Mr Bryant said investors would be “wise” to diversify their portfolios, maintaining a degree of liquidity so new opportunities can be explored as they arise.

“This approach also helps to manage risk, but even the most cautious investors need to balance risk and return and look at other yield opportunities from reputable asset managers that can add to returns in a low yield environment,” he said.

Mr Bryant also noted that the recent increase in housing finance and consumer confidence were good omens for investors.

“If these trends continue, the outlook for Australian equities remains positive,” he said.

Read more:

US inflation a near-term problem: deVere Group

Wingate fund added to Macquarie platform

CBA launches customer advocate function

Netwealth relaunches brand to bolster growth

Australian growth indicators 'mixed': AMP

Related Articles

 

Investors should look beyond banks for yield
ID logo
promoted stories

Appointments

Tania Cummin

Equip Super appoints strategy and markets executive

Staff Reporter

Paul Harding-Davis

Premium China Funds Management names new CEO

Jessica Yun

Matthew Wallis

Synchron appoints new state manager

Staff Reporter

Analysis

investordaily image

A correction, not a turning point

James Swanson

Martin Dropkin

Why bond covenants matter

Martin Dropkin

Maurizio Canton

Striking a balance between security and innovation

Maurizio Canton