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Alternative investments picked for 2005

Wednesday 12th January 2005

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Australian investment managers predict an increase in alternative investment mandates and weaker returns for listed property securities, according to the latest Fearless Forecast survey by Mercer Investment Consulting.

More than 200 investment managers from around the world (including 18 from Australia) responded to Mercer's survey providing one year performance predictions for local and global economies and capital markets.

In total, respondents manage in excess of US$8 trillion in global assets.

More than 68% of Australian investment managers predict an increase in alternative investments. While the spread across opportunities was relatively even, infrastructure was expected to be marginally more popular compared to other areas such as hedge funds and private equity.

"Australian investment managers were in general agreement that the local equity market will deliver reasonable returns in 2005, on average 8.6% for the ASX200," Mercer's global head of strategic research Garrie Lette said.

"This will mean a lower return than for 2004 so it is not surprising that investors will again be searching for opportunities in the alternative asset classes."

Listed property securities, however, are clearly out of favour. Thirty per cent expect it to be one of the bottom-performing sectors this year and none of those surveyed expect a top two position.

Opinion was divided about the other sectors of the sharemarket, most obviously for Financials (ex LPTs) with the number predicting the sector to be amongst the bottom performers almost equal to the number expecting it to be a top performer.

Two-thirds of managers predicted that the Australian equity market would outperform global markets for the sixth year running. Australian managers expected an average return of 8.2%for the MSCI in 2005, in line with the 7.7% prediction by global managers.

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