Tuesday 14th February 2012
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AMP Capital Investors (New Zealand), which manages $12 billion worth of assets, has increased bets on global growth, saying share valuations look attractive even in the face of Europe’s debt crisis.
“We think it is time to add some growth exposure to our portfolios and we now have a small overweight to global shares,” said Keith Poore, head of investment strategy and portfolio management at the company’s quarterly briefing. “Further stability on the eurozone front would see us consider adding to this position.”
In the three months ended Dec. 31, AMP Capital holdings of global equities returned 8.1 percent hedged, or 4.7 percent unhedged, the best return of any asset class behind global property with a 8.4 percent return and Australian equities which returned 6.3 percent. By contrast global fixed interest returned just 1.3 percent.
“Looking ahead for 2012 and beyond, we expect shares to outperform bonds by a healthy margin,” Poore said.
The downside risk to bonds stems from the cycle of weakness among European governments, their financial sector and gross domestic product, while equity markets continue to remain attractive in the face of global cash rates near zero, Poore said.
AMP Capital said New Zealand bonds should outperform US Treasuries, shrinking the spread, or yield gap, which currently stands at more than 200 basis points, for 10-year maturities. The gap closed completely in early 2011.
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