THE prominent funds manager Geoff Wilson has warned that profit expectations for the Australian sharemarket in the coming year are too high and that analysts will have to make revisions in the next few months.
However, the "difficult market" could offer "a great buying opportunity", he said.
Wilson Asset Management Capital yesterday posted an 80 per cent fall in full-year net profit to $4.3 million, reflecting accounting treatment of the return on its flagship fund, which fell to a return of 4 per cent, from 17 per cent last year.
Mr Wilson said the company holds "a conservative view" on equity markets for the next 12 months. "We believe analyst earnings forecasts are too high for [financial year] 2013, given the current low growth environment," he said.
"These earnings forecasts will be revised downward by analysts over the coming period."
The company's outlook statements at the forthcoming reporting season would be "very negative", he said.
Global ructions such as the European debt crisis meant that investors in the local sharemarket would have to expect lean returns in the medium term. Equity market returns "may not be as high as experienced in previous periods", Mr Wilson said, because the global economy is in a period of paying down debt, "which we think will continue over the medium term".
However, he said attractive investment opportunities were emerging and "there is the prospect of one or two more interest rate cuts" this year.
WAM Capital's revenue fell by 72 per cent and its net profit was $4.3 million. Last year it was $20.4 million.
Mr Wilson said the size of the fall resulted from accounting standards that require changes in the value of investments to be recorded in the company's profit and loss statement.
The company announced a 5.5? final dividend, up from 5?. Mr Wilson said the fund had outperformed the ASX accumulation index by 11 per cent. Earnings per share was 4? compared with 19.1? last year.
"We are pleased that in this tough environment we can continue to deliver strong outperformance."
The best stocks in WAM Capital's portfolio included Signature Capital, Aristocrat and Breville, while the worst were Centrepoint Alliance, Symex and Austar. Its shares closed 1.5? higher at $1.575.