Attempting to take shortcuts to out-performance during periods of bullish markets is rarely sustainable, according to Australian Unity Investments head of portfolio management Edward Smith.
The current state of financial markets is likely to generate a rash of investment products that promise the world for very low risk, he said.
“Some people may argue that now is a good time to look at leveraged products to take advantage of market growth. The challenge is that the risks associated with such strategies are not always obvious, and typically are revealed when it’s too late to reverse,” Mr Smith said, adding that best investment practice involves a clear set of objectives and strong governance.
“There is always danger in accessing volatile markets through complex structures. Wise investors are very circumspect about new products or structures that offer tax or other advantages to enhance returns, as they can be as dangerous to their financial health, especially if they are difficult to understand,” he said.
'Tried and true' strategies may seem a bit boring, but they are the safest bet when it comes to handling a person’s retirement savings, he added.
“Experienced advisers will be reflecting this in their client dealings and adopting an appropriate investment approach in their advice to reflect their clients’ needs,” Mr Smith said.
