Investors need to look at alternatives to bank stocks for both yield and growth, argues David Bryant, chief executive officer of Australian Unity Investments.
“Banks are getting a lot of attention this reporting season – not always for the right reasons – raising questions about their position as the yield investment of choice.
“Their profits have been soft and pressure on market growth, margins and bad debt ratios are expected to continue.
“And with such low interest rates there is also pressure on banks’ ability to maintain deposits and stem flows to equities and property, possibly putting further pressure on dividend policy.
“What it means for investors is more uncertainty and they should be looking at alternatives to banking stocks, particularly in areas such as commercial property.”
Mr Bryant says that there are few standout opportunities for yield investors and they would be wise to diversify their portfolio, keeping some liquidity so they can take advantage of any new opportunities.
“This approach also helps to manage risk but even the most cautious investors need to balance risk and return and look at other yield opportunities from reputable asset managers that can add to returns in a low yield environment.”
Mr Bryant says that there are still a number of positive signs for investors – for example with both consumer confidence and housing finance showing a pick-up.
“If these trends continue, the outlook for Australian equities remains positive,” he said.
For more information please contact:
CEO, Australian Unity Investments
T: 03 8682 4550