SHIELD – Sustainable High Yield | Yield trade to return as currency strengthens

Macro Outlook: Central banks policies continue to remain a deterrent for the global economy to evolve. The return of the currency wars will maintain low growth, falling commodities and low to negative interest rates into the future. Falling bond yields and low growth will drive investors towards high yielding Australian equities. The US Fed is expected to maintain rates while more stimulus expectations are rising in Japan, China and Europe. Growth in US is likely to pull back while Euro recovery will take time. Australian equities have been sold down on the currency trade through the past 12 months. The current risk/return profile suggests we are likely to see this trade reverse as yield premium widens and USD weakens. SHIELD Top 20 picks are: large cap – CBA, WBC, ANZ, TLS and BHP; mid cap – MFG, CGF, HGG, QAN and PPT; small cap – OFX, PTM, MOC, CCV, RCR and AGI; and micro cap – LOV, DDR, SIQ and VTG. (VIEW LINK)