Already a subscriber?Macquarie says it’s time for investors to start buying up real estate investment trusts and other companies that are less linked to the economy after warning that returns in some parts of the sharemarket are starting to falter.
The broker also said US asset managers were the most bullish in decades. This is despite the most aggressive interest rate tightening cycle in a generation.“Be fearful when others are greedy,” Macquarie said. “In the past when sentiment was already very bullish, forward returns were weak and led by defensives. When the cycle shifts to a slowdown, the odds of defensives outperforming likewise start to rise.
“We think the most likely outcome is a shift to a downturn around November 2024, and that it lasts mid-2025.”With that in mind, the broker has shifted its position on the ASX real estate sector to an “overweight” rating,“With the expected to cut in September, we would look past the risk of an RBA hike, and are now overweight REITs,” Macquarie wrote in the report.
As part of Macquarie’s shift towards REITs, the broker has added property developer Mirvac to its model portfolio, where it joins existing positions in Charter Hall and Goodman Group.