Sold down your residential property assets? Here’s some investment options for your capital

If you’re moving out of property, or a sale is on your radar, it’s good to know there are  other investment options for your capital.

Holding property assets, whether residential or commercial, has long been an attractive investment choice. Property is tangible and familiar; it offers the potential for capital growth, income and tax effectiveness. Plus, for many business owners, property assets provide the premises that the business trades from.  

Yet for a range of reasons – market conditions, tax, overexposure, regulations, or a need for greater liquidity – you may be selling down your residential or commercial property investment portfolio or downsizing your home

You’re not alone. Imagine an example of Jing,^disclaimer a successful property developer. Jing had built a thriving business specialising in residential real estate projects. Over time, she also invested her personal wealth into a large Australian residential property portfolio.

As her wealth grew, Jing became increasingly concerned that both her business exposure and her personal capital were tied to the fortunes of one asset class – residential Australian property. Jing sought advice from ANZ Private to find a more diversified solution for her personal capital.

To mitigate Jing’s concentration risk, ANZ Private diversified a portion of her personal wealth across a strategic portfolio of Australian and international shares, bonds, infrastructure and private markets.

Jing’s investment portfolio was tailored to her long-term financial objectives and, in concert with her remaining property portfolio, gave her much greater financial security.

 The advice Jing received from ANZ Private enabled her to concentrate on expanding her property development business, confident that her personal financial future was being expertly managed.

Take a whole-of-portfolio approach when investing sale proceeds

When investing, it’s important to take a whole-of-portfolio perspective that comprehensively considers all your investment and risk exposures, including your business exposures.

A successful whole-of-portfolio approach will see your available cash invested to improve the performance potential of your total portfolio, help mitigate your portfolio risk and consider your overall financial objectives.

Diversify for stronger risk-adjusted performance

At ANZ Private, we invest the time to understand your exposures, your risk appetite and your financial objectives. We can then customise an investment strategy based on your needs.

Tailored investment strategies typically invest in diverse asset classes with different risk and return drivers. This is because assets tend to have distinct cycles, responding to macro factors differently. If there’s a downturn in one industry, country or asset, your portfolio is cushioned by other investments experiencing different conditions.

Alternatively, investment assets may respond to the same conditions in a different way. Figure 1, below, shows annual returns for selected asset classes ranked from best to worst for each calendar year over the last 10 years. It illustrates how asset classes can have cycles of high returns in one year followed by low or negative returns in the next.

Figure 1 Year-by-year annual asset class returns

info-01

Source: Morningstar Direct, as at 30/06/2024.

At ANZ Private, we understand how different asset classes behave during market cycles and can actively manage our clients’ portfolios through different market conditions during an investment cycle, including downturns. Our ongoing, risk-aware portfolio management process can help to smooth out your overall return.

Investment access

We’re seeing increased client interest in private market products due to their diversification and performance benefits.^disclaimer Such investments, which are typically unlisted, may include local and international private equity, private debt and infrastructure. These investments have traditionally been unavailable to personal investors due to high investment minimums, poor liquidity and distribution limitations However, ANZ Private’s institutional strength and capability can help open the door to private market products. Investing in these types of assets requires a high level of professional expertise, which clients are comfortable drawing on.

Ensure adequate portfolio liquidity

Another factor to consider when investing your cash proceeds is the importance of liquidity – that is, the ability to quickly convert your investments into cash. When you invest in assets listed and traded on public exchanges, you’re able to quickly meet any unexpected financial needs.

What’s more, liquid markets tend to be more efficient, meaning that asset prices reflect available information and may be less prone to manipulation. Also, the ability to actively trade investments means that market inefficiencies can be exploited.

Benefit from ANZ Private’s investment capabilities and expertise

As investment specialists, we’re experienced in working with clients for the long term. Our in-house Chief Investment Office collaborates with Australian and global investment houses to offer strategies and solutions. We’re committed to providing you with strategic investment advice tailored to your circumstances.

For more information, on  visit our approach page. You can also find more detail on our strategy via the Private Insights Hub.