subscribe to our newsletter sign up

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

Investor strategy ‘may not work’ this year

Town sign

A fund manager has warned investors that their strategies may no longer be functional in 2017 given the raft of policy changes expected around the world.

Asset allocation will be the major challenge this year as investors have to deal with Europe and Japan loosening monetary policy while the US pursues fiscal supply-side policies, according to boutique fund manager Instreet.

“The consequence of this different approach will drive bond prices higher and create monetary and fiscal policy issues in Europe and Japan. It will also see the US dollar continue to strengthen, with the fallout for investors being a challenging environment in terms of asset allocation,” Instreet managing director George Lucas said.

“Asset allocation strategies that have worked for the past eight years, focusing on central bank activity, may not work going forward,” Mr Lucas added.


While December’s long-anticipated US rate hike sent markets into overdrive, Mr Lucas says US fiscal policy will become even more significant in 2017.

“Even US rate rises will take a second seat to fiscal policy announcements as the US Federal Reserve attempts to stay ahead of re-inflation policies coming out of the US government,” he said.

Any moves will likely see the Turnbull Government taking note since it affects Australia’s global competitiveness.

“Our 30 per cent company tax rate will look high compared with the 15 per cent being proposed by Trump for the US. It’s also higher than the UK’s 20 per cent rate, not to mention the low Asian corporate tax rates,” Mr Lucas said.

“This will create an issue for the Australian government since it has been trying to encourage more fixed investment by companies following the mining boom as corporates look to invest in countries with low tax rates. As a result, it won’t be surprising to see the corporate tax rate back on the political agenda for Australia in 2017,” he added.

More broadly, investors should be more bullish on some Australian sectors Mr Lucas said.

“Finally, as global investors shift their money out of defensive assets and into sectors such as energy, materials and banks, Australian equities should eventually benefit, thanks to our high exposure to these sectors.”


Investor strategy ‘may not work’ this year
Town sign
nestegg logo
subscribe to our newsletter sign up
Recommended by Spike Native Network
Anonymous - It means they won’t be stealing my tax refunds and cutting my retirement income by 30%....
Anonymous - Sorry ... 2 years de facto equals marriage and you can be carved up. This is Lionel Murphy’s no fault divorce where men are asset stripped and.......
Anonymous - The confiscation of Imputation Credit has been stopped, thanks to the Liberal minded Aussie voters that stand up to correct the inequality so that the.......
Cheryl k - Seems a no brainer
If you want small /medium size business to grow and employ more people vote liberal
If you want to be a self funded retiree vote.......