Bullish sentiment is on the rise thanks to a Coalition win.
The biannual Investment Manager Outlook (IMO) from Russell Investments reveals that 74% of managers are positive about the Coalition’s victory.
Many expect more consistent policies and the removal of mining and carbon taxes to reduce uncertainty and increase investor confidence.
However, while the recent election and change in government is considered a positive, director of Client Investment Strategies Scott Fletcher warns that issues remain in the marketplace which could create market instability in the short term.
“Considering the ongoing discussion around Fed tapering and the geopolitical unrest, we remain cautiously optimistic on the domestic share market in the near term. Events such as the U.S. government shutdown and potentially higher bond yields are significant short term global risks that might cause market volatility to rise,” he says.
Managers prefer international shares (71%) over Australian shares (65%), but 71% of managers think Australian shares are fairly valued.
On the flip side, A-REITs, domestic bonds, cash and the AUD are some asset classes where managers continue to remain bearish.
According to the survey, fund managers consider share markets to hold the best investment opportunities both at home and overseas. Russell’s strategists broadly agree with this among signs of market recovery, but say that investors need to be wary of near term risks which add uncertainty.
“At Russell, we believe in the importance of closely monitoring and responsibly adapting to changes in the market environment in order to manage risk and capture investment opportunities as they arise. Responding is one thing, but the ability to separate ‘noise’ from ‘substance’ will help keep investors focused on the main game and avoid knee-jerk reactions,” says Fletcher.
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