The Australian equities market is capable of generating small capital gains along with some yield income for investors in 2015, according to an investment specialist.
“Having a surprise rate cut, the potential for another rate cut on the way, we have better prospects for capital return in the equity market in Australia,” Platypus Asset Management chief investment officer Donald Williams said.
“Last year the capital return was around 3 per cent, so less than dividend yield, and this year I think the equity return should be a small capital growth as well as a reasonable dividend yield.”
While a negative picture had been painted of the minerals and resources sectors of the share market, Williams said he believed some good investment opportunities still existed.
“It remains a stock-picker’s market and in some of the poorer performing sectors you can still find some opportunities, especially in the natural resources areas – an area where I think there are more opportunities this year than there have been for several years,” he predicted.
“Obviously that’s just a function of the share prices being smashed over the last 12 months in particular.”
He cited the energy and materials sectors as possibly the two under most pressure in terms of earnings growth, but said he was not jettisoning them entirely from his portfolios.
In regard to energy, he highlighted Oil Search as one company Platypus liked and in the minerals space he favoured emerging gold companies and those organisations involved in nickel production.
When looking at strong-performing sectors, he identified healthcare as one for investors to examine.
“The great earnings performance that healthcare has produced over the last few years will continue and this year, of course, it’s going to be enhanced quite a bit by the lower currency,” he said.