The aim of the conference is to determine a suitable tactical asset allocation for a medium risk 40 year old investor.
This is done by an expert panel, this year chaired by economist Donal Curtin, after its listens to and questions investment managers in each asset class.
Curtin says the panel uses as its benchmark an asset allocation which is representative of the average New Zealand investor (based on statistics from organisations such as the Reserve Bank).
This year the panel chose to overweight three of the four New Zealand asset classes, while taking a neutral or underweight position on all the Australian and international assets.
|
Asset class |
Benchmark |
Tactical |
Diff |
|
Cash |
5 |
0 |
-5 |
|
NZ fixed interest |
5 |
10 |
+5 |
|
Aust fixed interest |
5 |
0 |
-5 |
|
NZ equities |
15 |
20 |
+5 |
|
Aust equities |
5 |
5 |
0 |
|
NZ property |
5 |
10 |
+5 |
|
Intl fixed interest |
20 |
20 |
0 |
|
Intl equities |
40 |
35 |
-5 |
|
100 |
100 |
Curtin says the investment outlook for the year is relatively benign, however there are a couple of hot spots, namely the United States sharemarket and "Internet mania".
Overall the panel devised its asset allocation on the basis that there will be solid economic growth across the globe, and moderate inflation risks.
Curtin says there is an expectation that economic growth will shift from the United States to Europe and Asia, and that value investment will increasingly come into vogue.
New Zealand was attractive to the panel as the sharemarket is, on a relative basis, undervalued fundamentally, plus it continued to have a high dividend yield, which offered a fallback position should markets turn sour.
Likewise, property was favoured because its high yields are attractive and the asset class had strong defensive characteristics.
A full analysis of the asset allocation and the reason behind the decisions will be published in the Features section soon.
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