Investors shun equities for property

Increased volatility in the Australian share market has caused investors to reduce their equity exposure in favour of property.

A new report by Colonial First State has found that equity preference in NSW fell 42 per cent and by 24 per cent in Victoria over the six months to June 2014.

Released today, the latest Colonial First State Global Asset Management (CFSGAM) – University of Western Australia Business School Equity Preference Index (EPI) found that overall, Gen X males (35 to 49 years old) still have a higher average exposure to equities at 210 points compared to 46 points for women.

However, Gen X men reduced their preference for equities by nine per cent over the first half 2014, potentially due to increased preference for investment property, according to the EPI.

“Interestingly, the states with the strongest capital house price appreciation – NSW and Victoria – experienced the strongest increase in investment lending and had the weakest EPI in the June-half 2014,” CFSGAM senior analyst, economic and market research, Belinda Allen said.

“This raises the question of whether funds were moved out of equities and into investment property,” Ms Allen said.

Gen X women are still lagging Gen Y women (under 35 years old) when it comes to their preference for investing in equities, with Gen X women exhibiting investor behaviour closer to that of retirees.

Ms Allen said the gap between preference for equities for Gen X women and Gen Y women is larger than it should be.

“Gen Y women are investing more appropriately for their age group than Gen X women, who are behaving more like retirees in terms of risk appetite,” she said.

“This could be a problem long term, as most Gen X women are in their prime accumulation phase, and should be considering investing in more high growth assets.”

 

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