Speaking in Sydney yesterday, UBS Wealth Management head of investment strategy David Sokulsky said heading into 2015, Australian investors should look towards the US equity market instead of being overweight in Australian equities.
“We really see the US to be the standout opportunity. So in terms of our asset allocation, in terms of our overweight, we see the US as the place we want to allocate to,” Mr Sokulsky said. “One [reason for that is] we see, probably, earnings growing to about eight per cent next year.”
“In terms of the US, it is really the equity market where we see that opportunity,” he said. “US equities have obviously had a great year this year and we expect that to slow down a little bit, but relative to the other regions it will still outperform.”
Mr Sokulsky also pointed out that portfolio diversification hasn’t “really mattered too much” over the last five years, but as risk prospects increase Australian investors will need to start diversifying their portfolios.
“When we have a look at the majority of Australians they are very heavily exposed to Australian equities,” Mr Sokulsky said.
“Now we see that as being a key risk, particularly [as they are] so geographically focused, [also] with a slowdown in China occurring and the property market being a risk and we obviously had the Murray Inquiry come out where it raised a lot of question marks,” he said.
“So for a number of reasons we think there [are] risks in the local market,” Mr Sokulsky said. “So diversification is going to be key going forward [and] that is really key for Australian investors.”
