The fundamentals of the investment markets are that there is too much debt in developed markets and that there will be slower growth for a longer term, a fund manager has said.
Fidelity Investment Management portfolio manager Kate Howitt said the 'new normal' was that there would be "shorter, sharper cycles".
The past 30 years had seen debt accumulation at the "most extreme" levels in both governments and households of any period in history, and one of the few certainties was "the next 30 years are not going to be the same", Howitt said.
Equities - both defensive and cyclical - remained "fundamentally one of the best asset classes, outpacing inflation", she said.
The United States' growing self-sufficiency in food and in fuel (shale oil-gas), combined with the third round of quantitative easing, was a "frank admission that they will inflate away debt, so then you definitely don't want to be in bonds", she said.
She also discounted the great Australian dream of property ownership as a guaranteed source of capital growth, citing a study by Bank of America Merrill Lynch that questioned assertions of structural shortages of housing in Australia.
Occupation levels of existing housing had fallen to 2.65 people, she said, and the real vacancy level was 10 per cent, while 75 per cent of housing had one spare bedroom.
This, combined with migrants' acceptance of higher numbers of occupants per house, meant the alleged housing shortage was not as acute as portrayed - and so, in the future, property would be for capital gains, not income.
