Mercer has warned investors to ensure there is still momentum left in the equity market, rather than blindly following market trends.
The fund manager said that investors who are yet to join the stock market need to ensure they haven't missed most of the positive returns likely to be experienced.
"I think the really interesting thing, if we look over a year, is that some of the sectors are up 40 per cent and healthcare is up over 50 per cent on a one-year basis," Mercer principal David Carruthers told InvestorDaily.
"It's how far and how quickly these things can go and if people are now looking at the market and saying 'Boy it's starting to look good,' are they really too late to get in?
"It is really for people to say 'Is there some steam left in this rally, are the fundamentals there or have things got too far ahead too quickly?'"
Mercer's February sector survey found that Australian shares saw a positive end to the month with the S&P/ASX200 Accumulation Index returning 5.3 per cent.
All sectors excluding materials finished the month higher, with the median Australian shares manager outperforming the index by 0.7 per cent over the three months to February.
"I think the interesting thing since the start of the year - and we're only two and a bit months into the year - is that the market is already up 10 per cent," Mr Carruthers said.
"So there seems to be positive momentum going on there."
Mr Carruthers said that despite the positive momentum, smaller companies and resource companies are not seeing the returns experienced by the rest of the domestic market.
"A lot of that [momentum] is in the larger companies. Small companies have only done five per cent so far this year, compared to the 10-plus per cent in the larger companies," he said.
"If you avoid the resource companies and the small companies, the market has been really positive, so it's a really good start to the year."
