Balancing act: The trouble with too many bank stocks

The banks have delivered terrific returns over the past few years... but now their valuations are less attractive. Other companies, meanwhile, offer better yields as well as the benefits of diversification.

Summary: With the banks delivering such incredible outperformance in recent years, we suspect many investors have substantial allocation to this sector. But given the banks offer a less attractive valuation case than three to four years ago, we ask whether it is sensible for investors to retain such overweight positions.

Key take-out: Investors with unbalanced portfolios need to consider whether they are comfortable forgoing the benefits of diversification to generate a yield from the Australian banks.

Key beneficiaries: General investors. Category: Shares.

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