Investment firm leans towards fixed interest

Chris Timms.
Chris Timms.
During the past year, Craigs Investment Partners has moved to a more defensive stance in its investment intentions and remains comfortable with that position, broker Chris Timms says.

''We have reduced our overall exposure to growth assets and added to fixed interest. We now have only a slight 'overweight equities' position.''

Within equities, Craigs had reduced its recommended exposure to Australia and increased its recommended allocation to global equities substantially, he said.

New Zealand equities had been left unchanged, although in recent months Craigs had reduced its exposure to listed property - which meant a lesser allocation to the New Zealand market.

Investors should still focus on rebalancing their portfolios if they had not done so already, Mr Timms said.

There had now been several years of ''very strong'' equity markets, and while portfolios left unchecked would have probably performed exceptionally well, they would also be highly out of balance in terms of asset allocation.

''For new investors, we advocate a patient and cautious approach, as always.''

The uncertain situation in Greece continued, with the beleaguered country submitting to a proposal from European creditors in the hope of securing a bail-out, he said.

Banks in Greece had been closed since June 29, shortly before Greece defaulted on a repayment to the International Monetary Fund.

They might open tomorrow.

While the issues in Greece could mean further short-term volatility, it was not likely to derail the global recovery.

Craigs recommended new investors used periods of uncertainty like this one to quietly accumulate good-quality holdings as they became cheaper, Mr Timms said.

Looking ahead, there were some obvious economic and investment themes which would prevail over the second half of the year.

More cuts to the official cash rate were likely and there was a chance the Reserve Bank would reverse all four of last year's rate increases, taking the OCR back to 2.5%.

Although the dollar had fallen sharply, there could be more weakness to come if the Reserve Bank took that approach.

Investors should focus on exporters and continue adding to global equities where valuations looked attractive, he said.

There had been bonds issued recently with terms of between five and seven years, providing an opportunity for investors to top up holdings.

''We continue to favour good quality senior debt with terms out to five or six years. Given the fall in rates, we see more value in bank term deposits in nine to 12 months.''

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