With equities markets at multi-year highs in Australia, the allure of equities is growing at the expense of bonds which have underperformed in recent times

With equities markets at multi-year highs in Australia, the allure of equities is growing at the expense of bonds which have underperformed in recent times. However, Vanguard Australia has written commentary highlighting four reasons why advisors should discourage a move from bonds to stocks. Firstly, the fund manager reiterates the importance of a long-term investment horizon, so as not to make rash decisions on short-term moves. Furthermore, Vanguard notes the gains in the ASX 300, which is now in its 4th largest bull market (without 20% correction) in history, with potential equity market downturns much more severe than bond market downturns. Finally, with the rise of equities, portfolios are already likely to be overweight its allocation in equities, suggesting that a rebalancing back to bonds is more appropriate. (VIEW LINK)