New asset allocation from Morningstar
Morningstar is changing its asset allocation, both by category and the weighting of those categories.
Friday, October 20th 2006, 6:19AM
by Rob Hosking
Morningstar is also abolishing its alternative assets category.
The move to Australasian equities reflects the fact that New Zealand managers are already investing in Australia and vice versa, says head of research Anthony Serhan.
There are also rising numbers of dual listed stocks, as well as similar corporate practices and culture across the Tasman.
Investments formerly dubbed “alternative” are now spread around the other categories.
“It’s becoming increasingly difficult to generalise about alternative asset classes. It’s now more of a product selection issue rather than one of asset allocation.”
Many of the assets lumped as “alternative”, such as infrastructure, commodities and private equity are now available on listed exchanges or within traditional equity funds, he says.
At the same time as the category changes has come a tilt in asset allocations. The main change is a significant shift toward international bonds.
Morningstar is also sounding a warning about some listed property funds overseas.
This particular class has been particularly popular in Australia, and the class is taking off elsewhere, particularly in Europe.
“Be aware the yield from other countries is a lot lower than from Australia and New Zealand – if you are relying on the income part of it for a particular client you need to be aware of that difference.”
Putting money into global property will provide further diversification but the asset class is “an option not a requirement”.
“There’s going to be a lot of property listed products in Europe that aren’t going to be very good. You are going to need guys on the ground to know what is good and what isn’t.”
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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