Home Stock & Shares Key defensive stocks soar in the ASX but fund managers fear a tumble

Key defensive stocks soar in the ASX but fund managers fear a tumble

by Jonathan Adams

The ASX’s key defensive stocks, which have soared since November, are trading at record highs and highly inflated valuations, making them highly vulnerable to a sharp correction should inflationary expectations pick up.

For the past six months, yield-hungry investors have poured into Sydney Airport, Transurban and APA Group, pushing those companies and many other “bond-proxy” stocks on the ASX to all-time highs.

Defensive sectors that promise steady yields regardless of broader market conditions were market favourites in the early part of last year, but were heavily and dramatically sold down from June 2016 as the interest rates on 10-year US Treasury bonds began to rise off the back of inflationary expectations.

This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

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