Retail investors predict the trajectory of the local share market will be flat in 2019, but expect to be rewarded with modest returns, Investment Trends' latest survey shows.
The 2195 investors canvassed in the monthly Investor Intentions Index forecast the Aussie share market will grow 0.3% in the next 12 months.
Investment Trends research director Recep Peker said the December quarter of 2018 was the most bearish quarter since the GFC, with the average investor expecting no capital gains from domestic shares in 2019.
"Despite this, they still believe in the income potential of Aussie shares, expecting a yield of 4.1% over the next 12 months," he said.
Investors' concerns centred on the tension between the world's major economies.
US President Donald Trump's administration was a main concern for more than half (53%) of investors, followed by China's economy slowing down (41%).
Domestically, 30% of investors are equally worried about property prices and share market volatility.
"The last few months has seen investors take an increasingly global perspective when considering what factors may affect their portfolios. Recent market falls have helped confirm their fears, dragging down the average investor's outlook for 2019," Peker said.
Principal Global Investors chief investment officer Mustafa Sagun said he sees markets continuing to trend higher, but volatility remains.
"Investors should build downside protection in their equity portfolios and be opportunistic for upside when the market sells off," he said.
Sagun told investors to keep an eye on company earnings. If earnings growth expectations are positive (which they are now) equity markets tend to have positive returns, he said.
"Two of the biggest risks to my overall theme are the ongoing trade wars and increasing interest rates," Sagun added.
"Resolution, which we're seeing nascent stages of with a revised NAFTA and a truce between the US and China, would be the greatest catalyst for equity markets in 2019," he said.