Some Australian fund managers say the outlook for stocks is 'the worst since the GFC'

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After three strong years of gains on the Australian stock market, Australia’s top fund managers think that outsized returns are going to be harder to come by.

Devon Australia Fund portfolio manager Tama Willis told Fairfax that the outlook for stocks is the worst since the GFC in 2008/09. Willis, who returned 19% on his fund last year said, “We’ve seen a very strong three years. Now the equity market has re-rated to be close to fair value at a time when the global economic environment is more challenging – weaker growth in China is certainly a cause for concern.”

That view fits with the results of the most recent Bank of America Merrill Lynch survey of the globe’s top investors. Released yesterday, the survey showed that investors have their highest levels of cash in their portfolio since the GFC.

Sean Fenton of Tribeca Investment Partners was Australia’s best performing fund manager for the second year in a row, according to Fairfax. He said while strong markets will come again, “the big tailwind of ultra-loose global monetary policy pushing up all asset prices is now waning.”

He’s also worried about China but mentioned increased reserves at the big banks and the wash-up of the mining boom would make the share market less predictable.

“We expect the market to be pretty choppy in the year ahead,” he said.

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