It is a good time for financial planners to rebalance client portfolios for a market turnaround, according to research house Zenith Investment Partners
“We think it makes sense to at least reposition your base asset allocation,” Zenith associate director Glen Franklin said.
Portfolio allocation to Australian and global stocks has shrunk, as the financial crisis caused the S&P/ASX 200 and the MSCI World Index to slump over 40 per cent since last November.
It is important to top up those allocations again, otherwise advisers risk their clients being underweight in shares if the market rebounds, Franklin said.
“There is obviously a lot of uncertainty in investment markets… many advisers ask us if we are at, or near, the bottom of the market,” he said.
While picking market tops and bottoms is impossible, averaging money into the market can be a good strategy, he said.
Despite the market turmoil, Zenith is maintaining its balanced model portfolio of 60 per cent growth assets and 40 per cent defensive assets.
The growth aspect of the model portfolio consists of a 48 per cent split between Australian and international equities, with 12 per cent in local and overseas property exposure.
Zenith liked Platinum’s international funds, Zurich Global Thematic Fund, Acadian Global Equity Fund and Morgan Stanley Global Franchise Fund, Franklin said.
The defensive side of the model portfolio consisted of 35 per cent in fixed-interest and 5 per cent in cash.
Franklin said Zenith was advising planners to hold clients’ fixed-interest allocations as cash until mortgage and income funds open for application again.
