Mother of all stimulations excites panel

The 'mother of all stimulations" in the United States has encouraged the Morningstar Expert Asset Allocation panel to take a bullish stance on international shares.

It is predicting the United States market will recover more quickly than the market's predict, consequently it has increased its weightings to international shares.

One of the panel members even thinks that it is possible the US economy could grow by 4% in the year.

The optimism revolves around a number of factors which include: short term-interest rates being at 40 year lows, Government spending was boosting economic activity, sharply falling oil prices were putting large amounts of money back into families' pockets, and low interest rates were boosting the spending power of people who were refinancing their mortgage.

The panel was of the view that the US-led recovery would spread to the global economy.

The panel has made a minor 'tweak' to its allocation moving 1% of its cash holdings to international shares.

That takes the split between growth and defensive assets to 73.5:26.5% - close to the 75% maximum allowed for growth assets.

On the local front the panel spent some time discussing whether the Australian and New Zealand economies were going to be high growth or low growth prospects during the year.

The conclusion was that international share markets showed greater potential for growth. Despite this the panel decided to keep its overweight positions on in Australia and New Zealand (currently it is 1% overweight in New Zealand and 2.5% over in Australia).

The panel maintained its pre-existing strong view that cash is the preferred defensive asset.

It remains significantly underweight in the international fixed interest sector. It says the dominant factor for this sector is the global upswing.

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