Investors will need to increase their exposure to global equities in order to meet their investment objectives in the current economic environment, says Lonsec.
The company said current performance expectations for Australian equities offer a lower risk and return benefit than global shares, which coupled with the increased diversification benefits made the latter an attractive investment opportunity.
“Australian equities represent only a very small part of the global equity market capitalisation and are predominately concentrated in the financials, energy and materials sectors,” said Lonsec Research chief investment officer Lukasz de Pourbaix.
“It is important that investors look abroad to maximise the benefits from diversification and achieve a smoother return outcome over the long term.”
Mr de Pourbaix added that Lonsec had lowered its exposure to conservative alternative assets, instead increasing the weighting of global fixed income and diversified income.
“The main benefit of alternative assets is they tend to have a lower correlation with traditional asset classes, but investors need to ensure that they are using the right alternative strategies for their investment objectives," he said.
“Given the current outlook, we felt a slightly lower allocation to conservative alternative assets was appropriate for the defensive and conservative risk profiles.”
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