Investors are overinvesting in cash and bonds on the back of volatile market conditions, according to Fiducian.
Despite recent outlooks predicting stock market recovery in 2013, many investors are still hesitant to move into riskier portfolio options after the unstable conditions experienced during the global financial crisis.
"There is too much fear right now in the market because of what happened with the decline in 2008, and people are underinvested in the share market," Fiducian managing director Indy Singh told InvestorDaily.
"Most are probably invested in cash or bonds which won't help them, so they need to start looking at alternative opportunities in the share market."
Despite global economic hurdles, including the fiscal cliff in the United States, Mr Singh said the share market will start recovering over the next six to eight months.
On the back of promising long-term outlooks, some investors have already begun looking at high-yield equities as a way to receive fast returns.
While Mr Singh agrees there is good opportunity in high yielding securities, he warns that investors need to retain caution when following the yield chase.
"One must recognise that these are securities that are selling at well above their normal market valuation and, if things turn around, the focus will turn on resources or growth assets," Mr Singh said.
"In a sense, what people are trying to gain in the interim could more than be offset by the price they are buying them at and a price decline."
