Be wary of investment short-cuts that promise out-performance: AUI

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With the market and investor sentiment on the way up, one lesson investors should remember is that trying to take shortcuts to achieve out-performance is unlikely to be sustainable and will almost always end in tears, says Edward Smith, head of portfolio management at Australian Unity Investments (AUI).

Edward Smith

Mr Smith said the current market situation is likely to encourage the introduction of new products and that the investment community is likely to see a rash of investment products promising out-performance at low risk over the next year or so.

“Some people may argue that now is a good time to look at leveraged products to take advantage of market growth.  The challenge is that the risks associated with such strategies are not always obvious, and typically are revealed when it’s too late to reverse,” Mr Smith says.

“Good investment practice requires a clear set of objectives and strong governance. Investors should be wary of the promotion of new investment products that tend to follow rising markets and that claim to give over-the-odds returns.

“There is always danger in accessing volatile markets through complex structures. Wise investors are very circumspect about new products or structures that offer tax or other advantages to enhance returns, as they can be as dangerous to their financial health, especially if they are difficult to understand.

“Tried-and-true strategies that involve setting objectives and ensuring a diverse portfolio might seem boring, but boring is good when it comes to managing the life savings of most people.

“Experienced advisers will be reflecting this in their client dealings and adopting an appropriate investment approach in their advice, to reflect their clients’ needs,” Mr Smith says.

Australian Unity Investments is the funds management arm of Australian Unity, a national healthcare, financial services and retirement living mutual organisation. 

 Australian Unity Investments offers a range of investment funds in domestic and international equities, fixed interest, and property.  Its investment approach is to use its established in-house expertise in property and mortgages while also forming joint ventures and strategic alliances with boutique asset managers.


For more information please contact:

Edward Smith – Phone: 03 8682 4419


23 September 2013