Australian investors are over-weighted in residential property, according to Australian Unity Investments.
The manager has said it is important that investors, particularly those with self-managed super funds, broaden their approach to property investment to include more than just the residential sector.
"Generally speaking, Australians are over-exposed to residential property, especially those that own an investment property as well as their home," said Australian Unity's head of healthcare and retirement property, Chris Smith.
"Such investors are vulnerable in that they are overweight to residential property at the expense of other property sectors which are currently performing much better."
While investors are flocking to equity investment with the market improving, Mr Smith said it is important that they also look to other assets that could provide strong returns.
Now is a good time to invest in a broad-based property portfolio, he added.
"The current move from cash to equities, brought about by falling interest rates, shouldn't bypass other asset classes that provide growth and income," Mr Smith said.
"A better re-balancing would be to include a selection of property sectors as well as equities for both growth and defensive reasons."
Investors who look beyond the residential property market towards a broad selection of property funds could see large returns.
"The healthcare sector has outperformed all other property on a one-, three- and five-year basis, driven primarily by strong returns," Mr Smith said.
