Financial advisers expect Aussie equities to deliver capital gains of 3.5% over the next 12 months, according to new research.
The latest study from Investment Trends shows financial advisers are much more optimistic about local shares than they were last year, with expectations of 3.5% in capital gains in the next year compared to just 1.3% in 2020.
Advisers are also optimistic that things will return to normal in terms of how they invest client portfolios.
"COVID-19 asset allocation changes are not expected to be enduring," Investment Trends associate research director Kurt Mayell said.
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"Only one in five financial advisers believe that changes they've made to their process and recommendations will be for the long-term, and things are expected to return to some level of normality."
In terms of investment selection, advisers say their main priority remains diversification followed by capital growth and liquidity. Other areas that are becoming increasingly important are protection from market downturns and responsible investing, Investment Trends said.
In fact, the importance of responsible investing has grown significantly over the last 12 months, with Investment Trends finding over 40% of advice clients have requested to buy or sell investments based on environmental issues. This is up from 24% in 2020.
However, the researcher said advisers reported wanting more information in this space, with a desire to better understand the basics of responsible investments, including performance and underlying investments.
"Advisers who are prioritising ESG investments expect to use a wider range of products or increase their use of active management," Mayell said.
"To enable the growth of ESG investing, advisers believe that product providers should put as much effort into research and data analytics as they do on new product issuance."