Investment firm Argo Investments expects the recent fall in the Australian dollar will help the local economy in the 2015/16 financial year.
Argo also expects the housing market to stay strong.
Managing director Jason Beddow says expectations the Federal Reserve will raise its interest rate has prompted the US dollar to strengthen against several currencies, including the Australian dollar.
The Australian dollar is now down to around 73 US cents.
“The recent fall in the Australian dollar should provide some support for our domestic economy as we move into 2016, and we feel that the housing market is likely to remain robust, due to the continued support of accommodative monetary policy,” Beddow said on Monday.
He said a rise in US interest rates would likely be accompanied by some disruption in financial markets.
Argo on Monday reported a 16.5 per cent rise in annual net profit to $228.1 million – a record full year result – driven by increased dividends and distributions from the company’s investment portfolio.
The headline result was boosted by an $18.6 million dividend from global miner BHP Billiton’s demerger of South32.
Argo shares were four cents higher at $8.32 at 1058 AEST.
The company said its investment portfolio had outperformed the broader Australian share market over the financial year, returning a total gain of 6.1 per cent compared with the S&P/ASX 200 Accumulation Index’s 5.7 per cent.
The total return based on share price performance was 8.2 per cent.
Beddow said 2014/15 had been a challenging year for the Australian equities.
Weak commodity prices, including oil, had hurt several mining and contracting companies, and the move to higher regulatory capital requirements had hit the banking sector.
Nonetheless, higher-yielding and defensive sectors did well as investors looked for alternatives to the low interest coming from cash holdings.
Argo’s large holdings in Macquarie Group, AP Eagers, Ramsay Health Care and APA Group had helped Argo’s performance, although their contribution was partially offset by MMA Offshore, Santos and Origin Energy.
During the year, Argo spent $283 million on long-term investment purchases, partly funded by $129 million in disposals and takeover proceeds.
Purchases above $10 million included Medibank Private, Argo Global Listed Infrastructure, APA Group and Santos.
Sales above $5 million included Milton Corporation, Newcrest Mining, Echo Entertainment Group and Southern Cross Media.
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